[Edaily Reporter PARK MIN ] The domestic stock market remains mired in a slump, weighed down by a record-breaking “exodus” of foreign investors—totaling over 200 trillion won this year alone. The share buybacks by SamsungElectronics(005930)and SK hynix(000660), which had until recently helped defend against foreign selling pressure and prop up the index, are nearing an end, and retail investors have also exhausted their capacity for further buying, plunging the market into a “supply-demand vacuum.”

The market believes a stock market rebound will be difficult without the “return of foreign capital.” Key factors expected to trigger this return include: △ earnings reports from the top two semiconductor companies and additional shareholder return measures; △ the conclusion of the U.S. midterm elections; △ stabilization of U.S. Treasury yields and international oil prices; and △ the IPO of Anthropic.

◇ 89% of Foreign Net Sales Concentrated on Samsung Electronics and SK Hynix

According to the Korea Exchange on the 15th, foreign investors have recorded net sales of 208.5376 trillion won in the KOSPI market so far this year through the regular trading session on that day. Of this amount, 89% (185.7412 trillion won) came from sales of SamsungElectronics (including SamsungElectronics(1P) and SK hynix). Selling pressure concentrated on the top two semiconductor companies as doubts about the profitability of global artificial intelligence (AI) investments and concerns over earnings peaking grew.

As a result, as of the close of regular trading today, the foreign ownership ratio of SamsungElectronics fell to 46.16%—the lowest level in 18 years since 2008—while SK hynix (49.02%) also fell below its average for the past 10 years. The problem is that the index is facing downward pressure day after day as there are no domestic buyers to absorb the flood of shares being sold by foreign investors.

Foreign investors were net sellers of 3.6341 trillion won on the KOSPI again today, while retail investors were net buyers of 1.2886 trillion won and institutional investors of 1.6390 trillion won—but this was insufficient to stem the plunge. Consequently, the KOSPI closed at 5,554.22, down 454.59 points (7.57%) from the previous trading day. SamsungElectronics fell 9.48% and SK hynix dropped as much as 11.06%, plunging the market into a full-blown “Black Thursday” panic.

Even the shield of share buybacks, which had previously absorbed the “sell-off bomb” from foreign investors, lost its effectiveness, and the companies were unable to avoid the bear market. SK hynix, which has been conducting share buybacks and cancellations totaling 40 trillion won since late August, is set to complete the program around the 20th, while SamsungElectronics, which carried out a 15 trillion won share buyback, already completed its purchases on the 6th.

Retail investors’ enthusiasm has also waned significantly. While retail investors recorded massive net purchases of over 80 trillion won this year when the KOSPI was in the 7,000–9,000 range, the subsequent sharp drop in the index has left many stuck in the red, making it difficult for them to inject additional capital. In fact, investor deposits—often referred to as retail investors’ standby funds for the stock market—had approached 140 trillion won in early June but had shrunk to 100 trillion won as of the 13th of this month.

An industry official stated, “Even among retail investors’ surplus funds that can be liquidated, there is a trend toward shifting capital to the U.S. stock market or high-yield bond products,” adding, “Even if the index attempts a rebound, a wall of selling pressure from retail investors looking to recoup their principal is likely to block any upward movement.” Consequently, the majority of industry analysts predict that an index rebound is virtually impossible without a return of foreign capital inflows.

Kim Doo-eon, an analyst at Hana Securities, said, “Even SamsungElectronics’ record earnings were not enough to overcome selling pressure from foreign investors,” adding, “The timing, strength, and speed of a market rally depend on a shift in foreign investor sentiment.” Kim Jae-seung, an analyst at HYUNDAI MOTOR SECURITIES, said, “With the KOSPI having fallen below 6,000, rather than searching for the reasons behind foreign investors’ net selling, it is more important to observe what might trigger their return.”

◇Four Key Turning Points to Halt the ‘Exodus’

Industry experts cite the macroeconomic environment and a recovery in semiconductor fundamentals as the four key triggers that could prompt foreign investors to return. Lee Jun-young, an analyst at EUGENE INVESTMENT & SECURITIES, said, “Samsung Electronics and SK Hynix account for over 50% of the KOSPI’s total market capitalization, and the semiconductor sector accounts for 71% of this year’s KOSPI operating profit consensus.” He added, “Given the sheer size difference, a rally in defensive stocks cannot offset semiconductor earnings; ultimately, it will be difficult for the index to rise unless these two companies see gains.”

First, the earnings announcements by the top two semiconductor companies, scheduled for late October, will serve as the initial turning point for supply and demand. The market anticipates that the earnings conference calls will address market concerns by presenting a mass production roadmap for High-Bandwidth Memory (HBM) 4 and updates to medium- to long-term profit estimates for 2027–2028. Furthermore, the recovery of foreign investor sentiment is expected to hinge on any additional shareholder return measures announced at that time.

The conclusion of the U.S. midterm elections on the 3rd of next month is also seen as a turning point that will alleviate market uncertainty. This is because, while a preference for safe-haven assets typically intensifies due to political noise immediately before an election, once the election is over, policy visibility improves, making it highly likely that global appetite for risk assets will revive.

Furthermore, stability in U.S. long-term Treasury yields and international oil prices, as well as the development of an exit strategy for the Middle East conflict, are key variables that will help alleviate macroeconomic pressures. It appears that a foundation for easing global monetary tightening and the return of foreign investors will only be established once the risk of escalation in the Middle East—such as the attack on Saudi Arabia—subsides and oil and commodity prices stabilize through U.S.-Iran negotiations.

The conclusion of the initial public offering (IPO) of the artificial intelligence (AI) startup Anthropic, scheduled for mid-November, will also serve as a major turning point. Just as tech stocks underwent a temporary correction immediately before SpaceX’s IPO last June, the global supply-demand imbalance and profit-taking pressure arising ahead of a major AI IPO are likely to gradually subside after the listing.

Analyst Kim Jae-seung noted, “Concerns over foreign capital outflows due to the large-scale IPO may intensify before Anthropic’s listing,” but added, “After the listing, supply-and-demand pressures are expected to ease, and uncertainty regarding AI’s actual profitability will diminish, which could revive foreign investor sentiment.”

Lee Jae-won, an analyst at Yuanta Securities Korea, stated, “The current market is in a phase where investors are focusing not so much on the absolute figures of corporate earnings but rather on the sustainability of profit growth, the stabilization of U.S. long-term interest rates and bond volatility, and shifts in global asset allocation.” He advised, “It is reasonable to take a phased approach by monitoring the easing of foreign selling pressure in spot and futures markets and the momentum of shareholder returns expected later this month.”