Korean Stock Market Sees Largest Decline Since June, Losing 100 Trillion Won in a Month

The KOSPI index has plunged approximately 26% over the past month, making it the worst-performing major stock market globally. This marks a stark reversal from being the top-performing market in the first half of the year. The extreme volatility has led to a noticeable outflow of funds from the stock market. Since June, investor deposits, which serve as standby capital for the market, have decreased by over 30 trillion won.

According to the Korea Exchange, from the peak recorded on June 22 to July 20, the KOSPI's decline reached 28.51%, the lowest among major global indices. Even with a 3.56% rebound on the day, the monthly decline stands at 25%. This drop surpasses declines in other major markets, including Russia's RTSI (-18.71%), Taiwan's TAIEX (-11.08%), and Japan's Nikkei 225 (-10.46%). Compared to the U.S. Nasdaq (-2.52%) and Dow Jones (+0.24%), the KOSPI's drop is significantly steeper.

The stock market's sharp decline has also led to a clear reduction in investment funds. Since early June, foreign investors have sold a net total of 70.9399 trillion won in the securities market alone. Cumulatively, the net selling since the beginning of the year has reached 190.5351 trillion won, equivalent to about 3.6% of the KOSPI's average market capitalization this year, marking the highest level since the global financial crisis in 2008 (4.6%). As the downturn persists, individual investors are increasingly adopting a wait-and-see approach. Investor deposits peaked at 139.6948 trillion won on June 4 but have steadily declined to 108.0818 trillion won as of July 16, a drop of over 31 trillion won in just one month.

Experts attribute the recent decline not to deteriorating fundamentals but to a chain liquidation of leveraged funds concentrated in AI-led stocks and supply-demand limitations in semiconductor sectors. Byun Jun-ho, a researcher at IBK Investment & Securities, noted, "The foreign net selling ratio over the past 60 days has reached an extreme oversold level, observed only four times since 2005. With the KOSPI's 12-month forward price-to-earnings ratio dropping to 5.7 times, we expect a rebound driven by value buying to occur."

* This article has been translated by AI.