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Korean Stocks Hit Record Highs Amidst Retail Sell-Off and Foreign Buying Spree

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • South Korean stocks (KOSPI) surged 17.91% on July 31, setting a record for the largest single-day gain in history.
  • Despite the rally, domestic retail investors sold a record 10.5 trillion won, while foreign investors bought a record 8.6 trillion won.
  • The divergent trading reflects retail investors' caution and loss-cutting mentality versus foreign investors' bets on a post-slump recovery, particularly in large semiconductor stocks.

The South Korean stock market, KOSPI, experienced an unprecedented surge on July 31, achieving the largest single-day gain in its history with a 17.91% increase. This dramatic rebound followed two consecutive days of sharp declines exceeding 8%, which had triggered circuit breakers.

I will never invest in the domestic market again.

— South Korean retail investorA sentiment expressed online by a retail investor reflecting a loss of confidence in the South Korean stock market.

However, the market's historic rally was marked by a stark contrast in investor behavior. Domestic retail investors offloaded a record 10.5 trillion won (approximately $9 billion USD) worth of shares. Simultaneously, foreign investors aggressively bought into the market, purchasing a record 8.6 trillion won (approximately $7.3 billion USD) worth of stocks. Both the retail sell-off and foreign buying figures set new historical records for single-day trading volumes.

To be safe, I plan to return to the US market. I believe that even if I get into trouble, the US market will save me, but I don't have such confidence in our domestic market.

— South Korean retail investorAnother online comment illustrating retail investors' preference for perceived stability in foreign markets.

Analysts attribute this divergence to differing investor sentiments. Retail investors, shaken by the market's extreme volatility, appear to be adopting a "break-even and exit" mentality, prioritizing capital preservation over potential future gains. Online forums are filled with retail investors expressing a loss of confidence in the domestic market, with some planning to return to U.S. markets for perceived safety.

I will sell when I break even.

— South Korean retail investorA common sentiment among retail investors indicating a strategy of exiting the market once initial losses are recouped.

In contrast, foreign investors are betting on a recovery, particularly in large-cap semiconductor stocks, anticipating continued profit growth. Their buying activity was concentrated in these sectors, signaling a strategic investment approach focused on undervalued assets following the significant downturn. This situation highlights a deep-seated caution among South Korean retail investors, who feel their trust in the domestic market has eroded due to repeated fluctuations, leading some to consider real estate as a safer alternative.

I should buy real estate.

— South Korean retail investorA comment reflecting a shift in investment preference towards real estate due to stock market volatility.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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