South Korea’s benchmark KOSPI index plunged more than 3.5% from its intraday high on Monday, driven by an 11th consecutive day of aggressive foreign selling ahead of Samsung Electronics’ highly anticipated AI-driven second-quarter earnings report.
Foreign Flight Triggers Technical Breakdown
This sharp pullback was driven by overseas institutions dumping ₩2.2 trillion, or $1.436 billion worth of Korean equities in a single day.
Marking their 11th consecutive session of net selling, foreign investors have now offloaded roughly ₩157 trillion ($116 billion) since the year began, aggressively shifting the market into a distribution stage.
Leverage Risks and Ant Investors
This wave of institutional profit-taking poses a severe threat to South Korea’s 15 million retail ant investors. Domestic market participation has surged alongside record borrowing, pushing leveraged investments to dangerous new highs.
Other Asian markets were experiencing mixed performance at the last check, with indices like Hong Kong’s HSI up 0.87% and India’s NIFTY 50 up 0.62% posting solid gains, while tech-heavy markets such as South Korea’s KOSPI down 0.50%, Japan’s Nikkei down 0.32%, and Taiwan lower by 0.48%.
Analysts warn the selling pressure could intensify. Highlighting historical trends, a top KB Securities analyst told Invezz that if the current foreign ownership ratio drops from 39.5% down to 35%, “an additional sell-off of approximately 260 trillion Korean won is possible.”
Such a massive withdrawal risks triggering a cascade of panic selling and margin calls among over-leveraged retail traders.
The Regional Pivot
While the sell-off is acutely felt in Seoul, macro investors across Asia are actively de-risking their portfolios. Even with global memory chip markets remaining undersupplied, funds are choosing caution over optimism.
If Samsung’s upcoming preliminary numbers fail to completely validate the AI hype, the resulting shockwave could trigger significant volatility across interconnected, tech-heavy markets in Japan and Taiwan.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Grand Warszawski on Shutterstock.com
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