Foreign Investors Net Sellers on South Korean Stocks Amid Volatility

Foreign investors were net sellers on South Korea's stock markets this month, the country's bourse operator said Sunday, while remaining net buyers of exchange-traded funds (ETFs) amid heightened market volatility.

Foreigners offloaded a net 12.1 trillion won (US$8.12 billion) on the main bourse and 338.1 billion won on the tech-heavy secondary market through Thursday this month, according to the Korea Exchange (KRX).

The KRX said foreigners were net sellers on the main bourse in eight of the 12 trading sessions through last week. The market was closed Friday for Constitution Day.

In contrast, foreigners scooped up 593.7 billion won worth of ETFs this month, posting net purchases in 10 of the 12 trading sessions.

The most popular ETF among foreign investors was KODEX Leverage, which tracks twice the daily performance of the benchmark Korea Composite Stock Price Index (KOSPI), with net purchases of 195 billion won, followed by KODEX 200, another ETF tracking the main index, with 180.6 billion won.

Meanwhile, foreigners were net sellers of single-stock leveraged ETFs, offloading 79 billion won worth of the SK hynix leveraged ETF managed by Samsung Asset Management Co. and 46.4 billion won worth of the corresponding product managed by Mirae Asset Global Investments Co.

"Foreigners apparently invested in different ETFs to reduce risk in their respective portfolios rather than betting on a particular market direction," a market watcher said.

Last week, the government unveiled a set of measures on leveraged ETFs as the country experiences heightened market volatility, including raising the minimum deposit requirement for investors in single-stock leveraged ETFs to 30 million won from the current 10 million won.

It also said investors will be allowed to trade single-stock leveraged ETFs in lots of 20 shares.