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Kospi continues to surge, but foreign sell-off may rein in bull run

Published: 27 Feb. 2026, 14:40

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at a record-high 6,307.27, up 223.41 points, or 3.67 percent, on Feb. 26. [NEWS1]

The Kospi closed above the 6,300 mark for the first time ever on Thursday, extending an unprecedented bull run. Yet foreign investors have been quietly selling Korean stocks, making their future positioning a key variable for further gains.

The Kospi surged 223.41 points, or 3.67 percent, to finish at 6,307.27 on Thursday, according to the Korea Exchange. The index jumped more than 200 points a day after breaking through the symbolic 6,000 level.

The rally was fueled by stronger-than-expected earnings from U.S. chipmaker Nvidia that were announced before the market opened and lifted Korea’s two semiconductor heavyweights. Samsung Electronics and SK hynix each jumped more than 7 percent, driving the benchmark higher.

Samsung Electronics’ market capitalization surpassed $1 trillion, a first for a Korean company. Only 13 companies worldwide have exceeded the mark, and Samsung rose to No. 12, overtaking Walmart and Eli Lilly. Other large-cap stocks, including Hyundai Motor, which rose 6.47 percent, and Kia, which gained 5.05 percent, also posted strong gains.

However, foreign investors extended their selling streak. They have been net sellers for seven consecutive trading sessions since Feb. 13. On Thursday alone, foreigners sold a net 2.11 trillion won ($1.47 billion) worth of shares, while retail investors purchased a net 658.8 billion won and institutions a net 1.24 trillion won, which helped support the index.

From Feb. 2 to Thursday, foreigners sold a net 13.4 trillion won on the Kospi. During the same period, retail investors and institutions were net buyers of 6.33 trillion won and 4.81 trillion won, respectively. Foreign investors focused their selling on semiconductor stocks, unloading more than 10 trillion won worth of Samsung Electronics and more than 5 trillion won of SK hynix.

A trader is seen at work at the dealing room of Hana Bank in central Seoul on Feb. 26. [YONHAP]

“Most of the foreign net selling was concentrated in semiconductors and automobiles and appears to reflect profit-taking after sharp gains earlier this year,” said Han Ji-young, a researcher at Kiwoom Securities.

With the steep rally coinciding with foreign selling, some market watchers have raised concerns that the Kospi may be nearing a peak. However, others say it is premature to view the trend as a full-scale foreign exodus.

The Morgan Stanley Capital International Index Korea exchange-traded fund listed in the United States recorded cumulative inflows of $3.3 billion in January and February, nearly double last year’s total annual inflow of $1.8 billion.

Foreign funds could flow back into the market if the dollar-won exchange rate stabilizes and global risk appetite recovers. Conversely, a correction in U.S. equities or heightened geopolitical risks could prolong the selling trend.

Exchange rates are seen displayed on an electric board outside a currency exchange in Myeongdong, Jung District, central Seoul, on Jan. 28. [NEWS1]

“Foreign investors are selling semiconductor stocks that have risen sharply and rotating into other manufacturing and hardware names, which suggests sector rotation rather than a broad shift to net selling,” said Lee Kyung-min, the head of FICC research at Daishin Securities.

“The inflow of passive investment from foreign investors, who simply track indices, is accelerating,” said Han.

The National Pension Service’s potential rebalancing is also seen as a mid- to long-term variable. The valuation of its domestic equity holdings has risen significantly, which likely pushed its domestic allocation above its target cap.

Dealers are seen at work at the dealing room of Hana Bank in central Seoul on Feb. 26. [YONHAP]

However, since the fund’s recently approved portfolio improvement plan temporarily defers rebalancing, analysts say the likelihood of immediate adjustments is low.

On the other hand, enthusiasm among so-called “ seohak ants,” referring to retail investors who buy overseas stocks, appears to be cooling. The value of U.S. stocks held by Korean investors stood at $164.9 billion as of Tuesday, down about $3 billion from $168 billion the previous month, according to the Korea Securities Depository.

Some analysts suggest that their return to the domestic market contributed to the won strengthening into the 1,420 won range per dollar starting Wednesday.

“Korean equities are gaining relative appeal as U.S. stocks lose some of their attractiveness,” said Baek Seok-hyun, an economist at Shinhan Bank.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YU-MI [[email protected]]