Foreign selling was an illusion... What's happening in the Korean stock market now
Foreigner selling was an illusion... What's happening in the Korean stock market now" | Lee Kyung-soo, Senior Research Fellow [Double Up]
Speakers
Lee Kyung-soo
— Senior Research Fellow
Summary
Lee Kyung-soo argues that foreign selling in Korea is misleading because foreign ownership is actually rising, supported by MSCI weight increases and potential developed market index inclusion. He also says the semiconductor cycle is in its late phase but price momentum is highest now, advising against premature selling.
- Foreign ownership of Korean stocks rose from 36% to 38% despite net selling, indicating real allocation increases.
- May MSCI rebalancing will boost Korea's weight from ~16% to ~24-25%, driving passive inflows.
- Korea has a 60-70% chance of MSCI developed market watchlist inclusion this year, a long-term catalyst.
- Semiconductor cycle is late but not over; earnings are still rising and 20% drop from peak signals true end.
- Late-cycle phase historically sees over 50% of total cycle price momentum.
- Risks include Big Tech CapEx sustainability and Samsung-Hynix correlation breakdown.
- Hardware stocks are outperforming software globally due to rising rates and quality.
- Defensive sectors like utilities and pharma may benefit if rates continue to rise.
Trade Ideas
Korea bullish, foreign ownership rising structurally
Foreign selling of Korean stocks is an illusion; foreign ownership ratio has actually risen from 36% to 38% this year, indicating that foreign investors are increasing their allocation to Korea despite headline net selling. The MSCI rebalancing in May will raise Korea's weight from ~16% to ~24-25%, and Korea is on track for a MSCI developed market index watchlist inclusion, which will drive further long-term inflows. Therefore, the Korean market is attractively positioned for continued foreign buying.
Semiconductor cycle late but momentum highest
The Korean semiconductor cycle is in its late phase, but this phase historically has the highest price momentum, with over 50% of the entire cycle's gains occurring here. Earnings are still rising sequentially (Q1-Q4), and the cycle is not over until a 20% drawdown from the peak occurs. Therefore, investors should not sell Korean semiconductor stocks prematurely; the rally has further upside even as some risks (CapEx sustainability, stock correlation breakdown) are building.
Up Next
This 3PRO TV (삼프로TV) video, published May 20, 2026, features Lee Kyung-soo discussing EWY, 000660.KS, 005930.KS. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Lee Kyung-soo · Tickers: EWY, 000660.KS, 005930.KS