South Korean equities reversed an early advance on Tuesday, with the KOSPI index sliding back below the psychologically important 7,000 level as overseas investors renewed their selling of local shares. The benchmark opened 0.58% higher but was trading down 0.56% at 6,964.85 by late morning in Seoul, a move that stood in sharp contrast to the supportive session on Wall Street.
Foreign investors were net sellers of 737.2 billion won ($545 million) worth of KOSPI shares by mid-session, while domestic institutions bought 141.9 billion won. The selling pressure was concentrated in the country's two largest semiconductor companies: Samsung Electronics fell more than 1%, and SK Hynix dropped 2.66%, making Seoul one of the weaker performers among major Asian markets on the day.
Wall Street tailwind fails to lift Seoul
The reversal is notable because the external backdrop was favorable. The Nasdaq Composite rose 1.05% to a record close overnight, and the Dow Jones Industrial Average gained 0.18%. Japan's Nikkei 225 also advanced about 0.4% on Tuesday, supported by gains in electronics and financial shares.
The problem for Korea is that the bond market has not joined the risk-on mood. The US 10-year Treasury yield remains near 5.3%, its highest level since 2002. Elevated yields increase the discount rate applied to future earnings, making richly valued technology shares harder to justify.
Tuesday's selling is part of a longer trend. Between September 1 and October 2, foreign investors unloaded a net 20.3 trillion won of KOSPI shares. SK Hynix and Samsung accounted for roughly 17.2 trillion won, or about 85%, of that total.
Memory stocks lead the decline
The KOSPI's weakness is less a broad rejection of Korean equities than another test of its heavy concentration in semiconductors. SK Hynix was one of the biggest drags on the benchmark on Tuesday, while Samsung also turned lower. This is happening despite extraordinarily strong industry fundamentals: South Korea's semiconductor exports surged 262.8% year-on-year to a record $60.3 billion in September, according to the Ministry of Trade, Industry and Resources.
The disconnect points more towards positioning and valuation than deteriorating memory demand. Investors have already enjoyed a powerful AI-memory trade, while 5%-plus US yields are making them more reluctant to chase those stocks higher.
Kiwoom Securities researcher Han Ji-young told MoneyToday that Samsung's earnings later this week could determine whether clearer trends in share prices and investor flows begin to emerge from next week.
Samsung earnings as the next catalyst
Samsung Electronics' preliminary third-quarter results, expected later this week, are now the KOSPI's most important near-term catalyst. A strong report could reinforce the argument that AI and memory earnings growth is powerful enough to overcome the interest-rate burden. It could also help reverse persistent foreign selling.
There is another complication. Samsung Futures researcher Jung Hee-chan told MoneyToday that the completion of large share-buyback programmes risks removing an important source of demand that has absorbed selling pressure in recent months.
This article is for informational purposes only and does not constitute financial advice.
