economy
Foreign investors have dumped billions of dollars of Korean stocks this year despite record rally. Here's why
The selling intensified Monday as the benchmark Kospi plunged more than 8% at the open, even as it emerged as one of the world's standout performers thus far.
TL;DR
- Foreign investors have sold billions of dollars of South Korean stocks this year.
- The Kospi has been one of the world's best-performing stock markets year-to-date.
- Selling is attributed to increased stock weightings in global benchmarks, forcing fund managers to rebalance portfolios.
- This phenomenon is described as 'forced selling' rather than a negative view on the market's fundamentals.
- Domestic investors have largely compensated for foreign outflows with substantial retail inflows.
- Selling also reflects concerns over risk concentration, as the rally depends heavily on Samsung Electronics and SK Hynix.