[Edaily Reporter Park Sun-Yeop ] Although the KOSPI surged by over 100% in the first half of this year, recording a record-breaking half-year return, analysis suggests that a closer look at the rally reveals lingering challenges, including a concentration on semiconductors, the neglect of the KOSDAQ market, massive net selling by foreign investors, and extreme volatility.
Lee Jae-won, an analyst at Yuanta Securities Korea, stated in a report on the 30th, “Excluding the record-breaking half-year return, the South Korean stock market in the first half of 2026 can be summarized by a concentration on semiconductors and IT hardware, the underperformance of the KOSDAQ, record-high net selling by foreign investors, and extreme volatility.” Based on the closing prices that day, the KOSPI had risen 101.14% since the start of the year, while the KOSDAQ had fallen 1%.

Semiconductors were undoubtedly at the center of the first-half rally. According to Yuanta Securities Korea, in terms of relative returns compared to the KOSPI in the first half, only the IT hardware and semiconductor sectors significantly outperformed the index, while all other sectors underperformed the KOSPI.
The analyst viewed this concentration not as a simple supply-and-demand phenomenon, but as a trend based on upward revisions to earnings estimates in the IT sector. He explained that, amid ongoing supply constraints, rising exports and storage prices are occurring simultaneously, and no fundamental factors have yet emerged that could derail the upward trend.
However, some analysts also noted that technical overheating triggered a correction in the short term. They pointed out that profit-taking pressure increased as stock prices diverged significantly from their moving averages and the Relative Strength Index (RSI) entered overbought territory. They interpreted the recent repeated sharp fluctuations as primarily driven by a correction of short-term overheating rather than doubts about the semiconductors’ actual earnings performance.
The slump in the KOSDAQ market was relatively more pronounced. SamsungElectronics(005930)As the semiconductor rally—centered on and SK hynix(000660) —and the earnings rally among large-cap stocks continued, both retail and foreign investors shifted their focus to KOSPI large-caps. Additionally, the fact that the KOSDAQ’s earnings momentum was significantly weaker than that of the KOSPI acted as a further burden. The analyst noted that, except for certain periods when the KOSDAQ enters a technically oversold zone or policy momentum comes to the fore, it is unlikely to see meaningful rotational trading.
Foreign investor flows were also cited as a key market variable in the first half of the year. According to Yuanta Securities Korea, foreign investors have net sold 177 trillion won on the KRX and NXT combined since the start of the year. Net sales in the second quarter totaled 108 trillion won, while June alone saw 58.3 trillion won in net sales. Since last week alone, massive selling pressure amounting to just over 33 trillion won has emerged.
The analyst explained that as the KOSPI has risen by over 100% since the start of the year, mechanical rebalancing volumes have increased as the quarter and half-year end approached. However, he noted that this selling pressure could ease once the second half of the year begins. In fact, at the end of the first quarter, after foreign net selling volumes expanded, the intensity of selling decreased significantly in early Q2 alongside the earnings season.
Increased volatility was another defining feature of the market in the first half of the year. The VKOSPI, the KOSPI volatility index, surged past 90 points to reach twice the peak level seen during the pandemic. Analysts attribute this heightened index volatility to the inflow and outflow of funds—primarily from retail investors—focused on single-stock leveraged ETFs, amid a growing market capitalization share of large-cap stocks.
Ultimately, the key factors for the market in the early second half are expected to be the return of foreign investors and the confirmation of large-cap earnings. The analyst pointed out that retail investors were the primary net buyers of single-stock leveraged ETFs, noting, “If foreign investors become the dominant force driving supply and demand, volatility could subside.” He also cited the fact that foreign ownership of SamsungElectronics has remained at its lowest level in the past decade as a variable to consider when assessing the possibility of a reversal in foreign capital flows.
Yuanta Securities Korea assessed that, with SamsungElectronics’ preliminary earnings announcement scheduled for the 7th and SK hynix’s ADR listing on the Nasdaq set for the 10th, it is time to wait for the return of foreign investors, a reduction in volatility, and an earnings-driven rally centered on large-cap stocks. SK hynix’s ADR listing was evaluated as an event that could enhance direct trading access for U.S. investors and fuel expectations for U.S. capital raising and ETF inclusion.