Money is leaving South Korea's stock market, retail investors are nursing losses and foreign funds remain hesitant. Increasingly, the buyers keeping the market afloat are the companies themselves.
The benchmark KOSPI managed a 0.26 percent gain Thursday to 6,579.48 despite net selling by all three major investor groups. Retail investors sold 955 billion won, foreigners 419.5 billion won and institutions 215.2 billion won.
The counterweight was "other corporations," a Korea Exchange category that captures much of the share repurchasing by Samsung Electronics and SK hynix. They bought a net 1.59 trillion won, extending their buying streak to 12 sessions.
"Corporate buybacks provide steady demand regardless of where the market is headed," said Jaewon Lee, a market analyst at Yuanta Securities Korea. "That allows foreign and institutional investors to stay cautious until the macro outlook becomes clearer."
For retail investors battered by the summer selloff, caution has turned closer to exhaustion.
"The moment I get back to break-even, I am out," said Yoo, a 33-year-old salary worker. "So many people at work are checking their stocks in the restroom that there are no empty stalls left."
For others, the losses have started changing how they spend outside the market.
Jang, a 31-year-old office worker in Seoul, said he had put nearly all the money he could invest into SK hynix, Samsung Electronics and a leveraged single-stock product.
"Do you know what it feels like to pack your lunch the night before because your stocks have fallen so much that you cannot spend money on lunch?" he said. "I am already stuck, and I don't have any cash left to buy more to lower my average purchase price."
BM Kim, a 36-year-old salesperson who owns semiconductor shares, is still holding on, although his expectations have come down.
"I think semiconductors will go up eventually," he said. "Perhaps not as much as they did over the past year."
That combination — unwilling to sell deep losses but increasingly unable or reluctant to put in fresh money — is showing up across the market.
A net 12.54 trillion won ($9.2 billion) flowed out of South Korea's stock market in August, according to an analysis by Shinyoung Securities.
It was the first monthly net outflow this year and the largest since the brokerage began compiling the figures in 2000. The amount exceeded the 2.83 trillion won withdrawn in December 2008 during the global financial crisis and the 8.05 trillion won outflow in December 2021 during the inflation shock.
Retail buying has collapsed even faster.
Individual investors' net purchases of KOSPI-listed shares across the Korea Exchange and Nextrade fell 90 percent to 5.4 trillion won in August from 54.5 trillion won in June.
Their remaining ammunition is shrinking as well.
Investor deposits — cash parked at brokerages and immediately available for trading — stood at 98.17 trillion won as of Sept. 1, down nearly 30 percent from this year's peak of 139.69 trillion won on June 4, according to the Korea Financial Investment Association.
Foreign and institutional money has not filled the hole.
On Wednesday, when the KOSPI plunged 3.99 percent, foreign investors dumped a net 1.91 trillion won and institutions sold 2.04 trillion won. Individuals bought 2.30 trillion won into the decline, while other corporations added another 1.65 trillion won of purchases.
Even that was not enough to absorb the selling.
Thursday was more revealing.
The index managed to finish slightly higher even as retail, foreign and institutional investors all sold. Other corporations again stood alone on the buying side.
The pattern began in earnest after South Korea's two dominant chipmakers launched enormous repurchase programs.
SK hynix announced a 40 trillion won buyback and cancellation program on Aug. 19, with purchases beginning the following day. It also pledged to return more than half of cumulative free cash flow generated from 2025 through 2027 to shareholders through buybacks, cancellations and dividends.
Samsung Electronics followed with a 15 trillion won open-market repurchase beginning Aug. 24 as part of a broader shareholder-return program expected to reach 90 trillion won to 110 trillion won this year.
The scale is large enough to change the market's daily supply-and-demand balance.
From Aug. 20 through Aug. 28 alone, other corporations bought more than 10 trillion won of KOSPI shares, with the purchases heavily concentrated in Samsung Electronics and SK hynix.
In effect, corporate Korea has temporarily replaced the retail investors who powered much of the earlier rally.
"Shareholder returns can continue through dividends or additional buybacks. I don't think that momentum will simply disappear," Lee said.
Buybacks, however, can support prices only for as long as companies keep buying.
Lee expects the broader market to remain range-bound through September and October while investors wait for greater clarity on interest rates, oil and U.S. politics.
"The market is likely to remain in a range through September and October while uncertainty remains high," he said. "If interest rates and oil prices stabilize and uncertainty eases after the Nov. 3 U.S. midterm elections, I think the market could regain upward momentum."
September has historically offered little comfort.
From 2000 through 2025, the KOSPI lost an average 0.68 percent in September, making it the weakest month of the year. The decline averaged 1.86 percent in years with a U.S. presidential or midterm election.
For a more durable rebound, foreign money will probably have to return.
Foreign investors are still net sellers, although the pace has eased sharply from earlier in the summer. Their selling narrowed to roughly 9.9 trillion won in August after reaching 58.7 trillion won in June.
They have also shown a willingness to return selectively, particularly to semiconductors.
"Foreign investors have not simply been selling," Lee said. "There are still strong sectors such as semiconductors, and I think foreign flows can improve further if macroeconomic and geopolitical uncertainty eases."
The won offers one argument for doing so.
It strengthened to 1,359.3 per dollar Thursday, extending a recovery of more than 12 percent from levels above 1,550 in late June.
"The stronger won is clearly a positive factor for foreign buying," Lee said. "But long-term interest rates are still too high, and oil has moved above $90. Those are burdens for foreign investors considering whether to turn net buyers."
Those pressures remain substantial.
The U.S. 10-year Treasury yield briefly reached 4.821 percent Wednesday, its highest since November 2023, before easing to 4.78 percent. Brent crude settled at $95.63 a barrel as renewed U.S.-Iran fighting kept concerns about supply disruptions alive.
That leaves the KOSPI in an unusual position entering September.
Retail investors have lost both money and appetite. Foreign funds are waiting.Institutions are providing little sustained support.
Samsung Electronics and SK hynix, meanwhile, are buying billions of dollars of their own shares.
For now, that is enough to put a floor under parts of the market. It is not yet the same thing as investors coming back.
AJP Takeaways
• Traditional buyers retreat: Retail, foreign and institutional investors all sold KOSPI shares Thursday even as the benchmark managed a 0.26 percent gain.
• Corporate buybacks fill the gap: Samsung Electronics and SK hynix's massive repurchase programs have turned "other corporations" into one of the market's biggest sources of daily demand.
• Retail firepower collapses: Individual net buying dropped 90 percent between June and August, while brokerage deposits have fallen nearly 30 percent from their June peak.
• Foreign return remains key: A stronger won is becoming more supportive, but high U.S. yields, oil above $90 and geopolitical uncertainty continue to discourage a sustained return of overseas capital.
Copyright ⓒ Aju Press All rights reserved.