As domestic individual investors rapidly withdraw their funds, forecasts suggest that the focus of market supply will shift to foreign investors. Individual investments in the KOSPI saw a net outflow of over 13 trillion won last month, with continued withdrawals this month. Key factors influencing future foreign capital inflows are expected to be the won-dollar exchange rate and the resolution of the Middle East conflict.
Kim Hak-kyun, head of the research center at Shin Young Securities, stated at a press conference on September 22 at the Korea Exchange in Yeouido, Seoul, "Given the current market situation, it seems that the key to supply is shifting to foreign investors. I believe the index will rise if foreign investors buy."
According to Shin Young Securities, considering customer deposits and margin loans, individual funds saw a net outflow of 13.5466 trillion won last month, marking the largest monthly outflow on record. As of September 18, an additional 9.83 trillion won had exited this month, with the average daily outflow exceeding that of last month. This figure estimates the actual flow of funds into and out of accounts, rather than just changes in customer deposits.
Kim characterized this trend as unusual. Typically, funds flow in after stock prices rise, and individual investors often inject money during corrections after the index peaks. However, this time, significant outflows occurred immediately after the market downturn. He noted that while individual funds had previously supported the market despite foreign selling until June, recent corrections have left individual investors significantly shaken.
To gauge the direction of foreign supply, Kim pointed to trading patterns of Samsung Electronics. He remarked, "The foreign ownership percentage of Samsung Electronics has dropped significantly, and while various interpretations can arise, concerns about semiconductors are easing considerably." He explained that the trading flow of Samsung Electronics could serve as a 'litmus test' for overall foreign supply in the domestic market.
Kim identified the won-dollar exchange rate and the resolution of the Middle East conflict as variables that could impact foreign supply. He stated, "Individuals have seen the largest inflow of funds in history, but after experiencing damage, they are now seeing net outflows, making significant changes unlikely. I believe the extent to which foreign investors buy will alter the supply structure compared to the first half of the year."
Regarding the recent interest rate environment surrounding the stock market, Kim assessed that U.S. long-term Treasury yields are moving ahead of the Federal Reserve's monetary policy. He explained, "The dynamics driving interest rates are not determined by the central bank but by market-determined rates," analyzing that concerns over the U.S. government's fiscal deficit are pushing long-term rates higher. He added that rising oil prices due to the Middle East conflict and fiscal burdens are further increasing pressure on interest rates.
He concluded, "In the short term, it is not the Fed's time but the White House's time," predicting that if the conflict eases and oil prices and long-term rates decline, global liquidity conditions could improve.
* This article has been translated by AI.
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