Why Foreign Investors Pulled Out $12 Billion From KOSPI in November — The Real AI, FX, and Risk Cycle Behind the Sell-Off
📘 Part 1. Why Are Foreign Investors Pulling So Much Money Out of the KOSPI Right Now?
— “This isn’t just about Korea. It’s the first deep breath in a global tech rally.”
November 2025 has been an unusually tense month for the Korean stock market.
Index swings have been sharp, but what really stands out beneath the surface is the sheer scale of foreign selling — very different from what we’ve seen in the past.
Many investors are probably thinking something like this:
“Earnings don’t look that bad… so why are they dumping this much?”
“Is Korea out of favor now, or is this just part of a bigger global move?”
To answer that properly, we need to break it down into three parts:
① How much have they actually sold? (the numbers)
② What triggered this wave of selling? (global AI, FX, rates)
③ Who exactly is doing the selling? (hedge funds, pension money, ETFs)
■ 1. “₩12 Trillion in November Alone” — The Foreign Sell-Off in Numbers
Let’s start with the raw scale.
According to Chosun Biz (Nov 21, 2025),
foreign investors sold a net total of about ₩12.0274 trillion
between November 1 and 21.
That makes this the largest single-month net selling
since the massive foreign outflows right after the COVID shock in 2020.
In a typical month, a net foreign buy or sell of even ₩1–3 trillion
is already considered a strong directional flow.
When that number jumps above ₩10 trillion,
it’s hard to see it as anything but a clear, directional move.
The next key question is: which names are they selling?
Maeil Business Newspaper’s breakdown shows:
- SK hynix: roughly ₩7.5 trillion in net selling
- Samsung Electronics: roughly ₩1.38 trillion in net selling
In other words, the core of this sell-off is not:
“The entire Korean market”
but rather “Korea’s AI and semiconductor leaders.”
That suggests this is less about
an imminent collapse in the Korean economy,
and more about a shift in global sentiment
toward semiconductors and AI risk.
Put simply, Korea is where that shift is showing up most clearly.
■ 2. Global AI Overheating Concerns — Why Korean Chip Stocks Took the Hit
Korea JoongAng Daily (Nov 21, 2025) summarized this phase as:
“Fears of an AI bubble in the U.S. are putting direct pressure on Korean semiconductor stocks.”
To unpack that, look at what’s happened in the U.S. over the past two years.
- NVIDIA
- AMD
- Microsoft
These names have been at the heart of the “AI infrastructure” trade,
and they’ve posted truly explosive gains.
The concern that’s emerged in the second half of 2025 is simple:
“Did this go up too far, too fast?”
- Data center CAPEX has surged in a very short period,
- Investors are asking whether GPU and server demand got ahead of itself,
- And more people are openly talking about the need to “tap the brakes.”
When that shift in sentiment starts, global investors connect the dots:
- AI hardware and software names in the U.S. start to correct,
- → Investors re-check valuations across the entire global chip sector,
- → Markets with heavy memory/HBM exposure (Korea, Taiwan) face stronger selling pressure.
Korea, in particular, sits right at the center of this chain:
- SK hynix — the world’s No.1 supplier of HBM memory
- Samsung Electronics — a full-stack semiconductor giant (DRAM, NAND, foundry)
Because of that positioning,
whenever there’s a “phase shift” in the AI investment cycle,
Korea is one of the markets that feels it first.
So you can think of it this way:
The stronger the excitement and the worry around U.S. AI names,
the more that shadow stretches over Korean chip stocks and the KOSPI.
■ 3. FX and Rates Uncertainty — Much More Critical from a Foreign Investor’s View
From a domestic investor’s point of view, it’s easy to say:
“As long as the stock goes up, who really cares about FX?”
But for foreign investors who judge performance in U.S. dollars,
FX is not a side note — it’s central to their actual returns.
KED Global (Nov 2025) put it bluntly:
“Korean won weakness has increased FX loss risk for foreign investors, triggering selling pressure on Korean assets.”
For example:
- A position may be up 5% in KRW terms,
- But if the won has weakened 7–8% versus the dollar in the same period,
- The foreign investor can actually be sitting on a loss in USD terms.
In October–November 2025, the KRW–USD rate pushed into the low-₩1,400 range.
For foreign investors, that’s a zone where it starts to feel like:
“If we stay in and this moves further, FX losses could get much worse.”
On top of that, they also have to worry about:
- Whether U.S. rates have truly peaked,
- The speed and timing of potential rate cuts after 2026,
- Middle East geopolitics and oil price volatility,
- And a broader risk-off mood toward emerging markets as an asset class.
Put all of that together, and the “first assets to trim” list
naturally includes markets like:
Korea, Taiwan, Hong Kong — markets with high tech exposure.
So the story is not:
“Foreign investors suddenly hate Korea,”
but rather:
“Korea is a textbook market to reduce risk in
when FX and global tech are both wobbly.”
■ 4. Profit-Taking — “We’ve Had a Big Run, So Let’s Lock in Some Gains”
Another key angle is simply: how far had these stocks already run?
From the first half of 2025 through October,
Korean semiconductor and AI-related names rallied hard on:
- AI server expansion,
- Explosive HBM demand,
- And expectations around being in NVIDIA’s supply chain.
For global investors — especially hedge funds and aggressive institutions —
the standard playbook looks like this:
- Get in early to sectors with strong narratives,
- Ride the rally as valuations and expectations climb,
- Take profits once the “risk of overstretch” starts to feel high,
- Then wait for a meaningful pullback before scaling back in.
We’re seeing that pattern globally:
- Partial profit-taking in names like NVIDIA, Meta, and cloud-related stocks in the U.S.,
- A short-term correction in TSMC in Taiwan,
- And pressure on internet and platform companies in Hong Kong.
So it doesn’t make sense to isolate Korea from the rest of the picture.
What we’re really seeing is:
“The market is cleaning up the excesses
from the exceptionally fast rally from 2023 through early 2025.”
➡ In other words,
the foreign selling in Korea is less about something “going wrong in Korea,”
and more about Korea being part of a broader global tech and AI
profit-taking cycle.
■ 5. Why Global Investors Treat Korea’s Sell-Off as a Signal
For many global institutions, Korea is not just “another emerging market.”
It’s closer to a gauge for the AI and memory cycle.
The structural reasons are clear:
SK hynix
- World’s leading supplier of HBM (high-bandwidth memory)
- A core memory provider for NVIDIA’s AI GPUs
Samsung Electronics
- Global leader in DRAM and NAND
- A major player in foundry as a full-stack semiconductor company
IT and semiconductor weighting in the Korean market
- Roughly 34–38% of the index, depending on which global benchmark you use
That means:
“When foreign investors aggressively sell Korean chip stocks,”
global investors can read it as:
“AI and memory risk appetite is starting to fade.”
That’s why professional investors in the U.S. and Europe
often treat KOSPI and KOSDAQ as a kind of “early warning” system.
- Foreign selling in Korean semiconductors spikes → “Is global AI money flipping to risk-off?”
- Foreign buying and weights in Korean semis rise → “Is this the bottoming phase for AI and chip names?”
From that perspective, the current foreign outflows in Korea
aren’t just a story about Korea “having a rough time.”
They’re a signal that global tech — especially AI infrastructure —
is taking a breather.
■ 6. “Who’s Actually Selling?” — Not All Foreign Investors Are the Same
This is the question many domestic investors ask most often:
“When they say ‘foreigners are selling,’ who exactly are they talking about?”
Headlines usually just say “foreign net selling of ₩X trillion,”
but in reality, there are three very different groups behind that flow.
● ① Hedge Funds and Quant Money (Short-Term, Aggressive)
Goal: Maximize short-term alpha.
Key traits in volatile markets:
- Heavy use of futures, options, and program trading,
- Algorithm-driven, high-speed in-and-out flows.
Behavior pattern:
- They are often the first to sell aggressively when a downtrend begins,
- But also among the first to come back once prices have corrected enough.
For them, it’s less about “buying cheap” and more about
“jumping onto the right side of the trend as quickly as possible.”
● ② Long-Only Pension Funds and Asset Managers (Long-Term, Weight Managers)
Goal: Deliver stable multi-year returns.
Key traits:
- They set explicit target weights like “10% in Country A, 5% in Country B,”
- If a country’s weight rises above target because prices have run too far,
they mechanically trim positions to bring it back in line.
Behavior pattern:
-
When Korean stocks have rallied strongly, or
when currency moves have inflated the USD value of Korean holdings, - They may sell some Korea exposure even without any fresh “bad news.”
Here, the selling is not about “disliking Korea,”
but about following portfolio rules and risk budgets.
● ③ Passive ETFs and MSCI-Linked Funds (Index Followers)
Goal: Track a specific index (MSCI Korea, MSCI EM, etc.) as closely as possible.
Key traits:
- When index weights or country weights change,
they automatically adjust positions accordingly, - When FX swings get large, risk control frameworks may push them
to reduce exposure to certain emerging markets.
Behavior pattern:
- Heavy selling can cluster around MSCI’s regular index rebalancing dates,
- They respond more to “index rules” than to individual company news or earnings.
When all three groups are selling in the same direction at the same time,
you get exactly what we’re seeing now —
a month like November with net foreign selling around ₩12 trillion.
That’s why the most accurate summary of the current situation is:
This isn’t just “foreigners are leaving Korea.”
It’s:
① hedge funds cutting risk,
② long-only funds trimming overweights, and
③ passive ETFs following index rules —
all overlapping at once.
📘 Part 2. Where Does the KOSPI Go From Here?
— “Volatile, yes. Structurally broken, no.”
The Korean market is clearly under short-term pressure right now,
but once you stretch the time frame to the medium and long term,
the picture looks very different.
The KOSPI’s path is better understood as a three-stage structure:
short-term volatility → medium-term recovery → long-term “level-up.”
Let’s walk through each stage in detail.
■ 1. Short Term (1–3 Months): A Volatile Stretch
— “This is mostly about choppiness, not a trend reversal.”
By late 2025, multiple global indicators are flashing slowdown signals.
● Manufacturing PMI Below 50 for Eight Straight Months
IMF and S&P Global’s latest manufacturing PMI data (2025)
show major economies running below the 50 line
— the contraction threshold — for eight consecutive months.
That points to gradually weakening global demand,
and because Korea is a highly export- and manufacturing-driven economy,
it tends to feel those shifts earlier than most.
● Short-Term Factors Behind the Current Pullback
- Global demand cooling,
- Temporary order adjustments in AI (CAPEX tweaks at big cloud players),
- Uncertainty about the exact peak in U.S. interest rates,
- And heightened FX volatility around ₩1,400.
All four have essentially hit at once.
● The Key Point
These are not classic “early-recession” signals yet,
but more like short-cycle adjustment factors.
In other words, this looks less like
“the start of a structural downtrend”
and more like “a period of elevated volatility.”
Historically (2020, 2022, 2023, 2024), we’ve seen the same pattern repeat:
large foreign selling phases followed by rebounds
within roughly two to three months.
➡ Bottom line:
some short-term downside is still possible,
but the risk of a full-blown index collapse looks limited.
■ 2. Medium Term (Around 1H 2026): A Rebound in Semiconductor Demand
— “2026 has a good chance of being another big year for chips.”
The single most important medium-term factor
is that AI infrastructure CAPEX is projected
to start accelerating again from 2026.
Multiple research houses are converging on this outlook.
● TrendForce (2025 Outlook)
- AI server replacement cycles ramping up again from 2026,
- HBM capacity expansion cycles at major suppliers re-accelerating.
● IDC (2025 Data Center Forecast)
-
Global cloud GPU upgrade cycles — roughly every 2.5–3 years —
are projected to bunch up in 2026, - Along with growing demand from edge AI and automotive memory.
● What Makes HBM Different
Unlike traditional commodity memory,
HBM tends to move in cycles like this:
install → big volume ramp → generational upgrade → new volume surge.
The H100 and H200-based data centers that were built from 2023 to 2025
are likely to start shifting toward next-gen GPUs and HBM (e.g., HBM4)
starting in 2026.
In that sense, this current adjustment phase
is more like the market catching its breath
ahead of the next leg in the AI infrastructure build-out.
➡ Medium-term takeaway:
From 2026 onward, AI servers, HBM, and next-gen memory
have a strong chance of regaining market leadership —
which would naturally feed into earnings power
for Samsung Electronics, SK hynix, and the KOSPI as a whole.
■ 3. Long Term (2026–2027): Index “Level-Up” Depends on Earnings
— “Semiconductors + Value-Up = The Core of a Structural Bull Case.”
For the KOSPI to move to a higher long-term trading range,
it needs more than just hope.
It needs three pillars to come together:
earnings, structural reforms, and policy.
Korea is one of the few emerging markets that actually has all three in play.
● (1) Samsung Foundry Competitiveness Recovering
2026–2027 is when Samsung Electronics is set to start executing
its 2nm and 1.xnm foundry roadmap in earnest.
- Chasing TSMC more closely,
- Potentially expanding business with clients like Qualcomm, Tesla, and AI startups,
- And increasing the weight of system semiconductors in its earnings mix.
A successful foundry turnaround would act
as a direct “earnings level-up” for Samsung.
● (2) New Growth Engines in HBM, DDR, and CXL
The HBM market is already on a structural uptrend,
but beyond 2026 we’re also looking at:
- HBM4,
- DDR6,
- And CXL-based memory expansion architectures.
These could collectively drive a qualitative re-rating
of the entire memory sector.
That’s how the memory industry can move away from
the old “buy low, sell low” commodity playbook
toward:
A higher-value-added model
→ resulting in structurally higher profitability and ROE for Korean chipmakers.
● (3) Korea’s Value-Up Program (Governance, Dividends, ROE)
The Financial Services Commission’s Value-Up program
is designed to tackle long-standing issues that have plagued Korean equities:
- Low dividend payouts,
- Governance concerns,
- Underdeveloped buyback and treasury stock policies,
- And chronically low ROE.
Foreign investors place a premium on improving
capital efficiency, shareholder returns, and governance.
If the Value-Up agenda translates into concrete actions,
it could become a turning point
in addressing the persistent “Korea discount.”
➡ Long-term takeaway:
Between 2026 and 2027, the KOSPI has a realistic chance
to build a structural bull case on two big pillars:
stronger semiconductor earnings and genuine progress on Value-Up.
■ Five Early Signals That Foreign Money Is Coming Back
— “If all five flash green together, you’re probably at the start of a new phase.”
Foreign flows are often the fastest indicator
of where the index is headed next.
When the following five signals start lining up,
the odds of a sustained foreign buying phase rise sharply.
-
A 40–60 won drop in the KRW–USD rate
In past episodes (2020, 2023, 2024),
FX stabilization was consistently followed
by strong foreign net buying in Korean equities. -
Rising foreign ownership in Samsung Electronics and SK hynix
These two names effectively set the tone for the KOSPI.
Once foreign investors start rebuilding positions here,
the rest of the market tends to follow. -
A shift in headlines from global media
When you start seeing phrases like:
“chip cycle bottoming” or “Korea discount narrowing,”
there’s a good chance you’re still early in the buying phase. -
Lower CDS spreads for Korea
As Korea’s sovereign risk premium falls,
the relative attractiveness of Korean assets
rises immediately for foreign investors. -
Spiking trading volume in U.S.-listed Korea ETFs (e.g., EWY)
When turnover in Korean ETFs listed in New York picks up,
that flow often spills over into the KOSPI the following session.
➡ In short:
when all five of these start flashing at once,
you’re very likely at the early stage of a renewed foreign inflow.
📌 Summary of Part 2
In the short term, volatility is high.
In the medium term, HBM and AI demand look set to recover.
Over the long term, semiconductor earnings plus the Value-Up agenda
argue that this is less a “bear market,”
and more a period where the KOSPI is
preparing for the next structural move higher.
📘 Part 3. Where Is the Money Going? — Comparing Global and Domestic Flows
— “Follow the money, and the market starts to make sense.”
At the end of the day, markets move on capital flows.
Stock-by-stock stories matter, but what matters even more
is where money is leaving — and where it’s going.
Looking at global and domestic flows in November 2025,
this isn’t just a “down market,”
it’s more like a broad reallocation phase.
Once you see that clearly,
it becomes much easier to build a coherent investment strategy.
■ 1. Global Flows
— “As the way people invest in AI shifts, so does the direction of money.”
From 2023 through early 2025,
most of the world’s AI money piled into “infrastructure” —
GPUs, servers, data centers.
Since late 2025, there are early signs of a rotation
from hardware toward software and actual business models.
① United States: From AI Hardware to AI Software and Services
In the U.S., the pattern now looks roughly like this:
- From pure NVIDIA GPU plays → toward upgrades in foundation models,
- More intense competition among OpenAI, Anthropic, and Google,
- Expansion into AI agents and API ecosystems,
- With Microsoft, Meta, and NVIDIA sitting at the center of these ecosystems.
So we’re moving past the phase
where “GPU order growth alone” could drive stock prices,
into a phase where model quality, usage, and enterprise AI adoption
become the key catalysts.
➡ For Korean investors, this matters a lot.
A hardware CAPEX pause can boost volatility in semis short-term,
but as AI business usage expands,
that eventually feeds back into renewed demand for GPUs and HBM.
② Japan: A CAPEX-Driven Supercycle
Japan has been one of the most aggressive countries
in ramping up manufacturing CAPEX in 2024–2025.
- TSMC’s fab in Japan: N3 process and advanced packaging lines,
- Tokyo Electron (TEL): among the top global semiconductor equipment spenders,
- Sony image sensors: expanding share in AI cameras and automotive sensors.
IMF data show Japanese corporates posting
the highest gross fixed capital formation growth (as a share of assets)
among G7 economies.
➡ Global money has increasingly adopted the idea that
“If you want exposure to the tools and fabs behind AI, you go to Japan,”
which is why allocations to Japanese semiconductor and equipment names
keep climbing.
③ India: The Top EM Magnet for Foreign Capital
In 2025, India has emerged as the top EM destination for foreign inflows.
The reasons are straightforward:
- Population growth and a rising middle class,
- A massive domestic consumption story,
- Large-scale infrastructure investment,
- And manufacturing relocation as investors seek “China+1” options.
Among India-focused ETFs,
those with heavy weightings in consumption, infrastructure, and financials
have seen particularly strong inflows.
➡ In short,
global capital right now is flowing along three major axes:
U.S. (software and AI services) — Japan (fabs and equipment) — India (growth and consumption).
■ 2. Domestic Flows
— “Why the Korean market hasn’t simply collapsed, even with foreign selling.”
Despite large foreign outflows,
the KOSPI has not turned into a full-on crash.
That’s largely because domestic money behaves very differently
from foreign money.
① Individual Investors: Buying the Dip in AI and Semiconductor Leaders
Korean retail investors have a deeply held conviction
that local semiconductor champions are long-term winners.
The logic is simple:
- Korea is No.1–2 globally in HBM, DRAM, and NAND,
- “Memory investment” is a structural theme in the AI era,
- Foreign selling → lower prices → more room to accumulate.
Historically, it’s common to see foreign investors dump shares,
only for the market to find a bottom
as individuals step in with staggered buying.
➡ For many retail investors,
these sell-offs are not a reason to flee, but a “long-awaited entry point.”
② National Pension and Other Domestic Pensions: Shifting Toward Dividends and Value
Pension funds move much more deliberately.
In October–November 2025,
top net-buy sectors for domestic pensions included:
- Financials,
- Steel,
- And high-ROE value stocks.
When rates stabilize,
dividend and value names tend to offer the most reliable defense
for portfolio returns,
so pensions have been quietly raising their weights in these areas.
➡ This is one of the reasons the market
has found strong support on the downside.
③ Domestic Institutions and Funds: Focusing on Power, Cables, and HVDC
Since the second half of 2025,
institutional and fund flows have increasingly concentrated
in power infrastructure names.
The logic traces straight back to AI:
- AI servers can consume 5–6x the power of traditional servers,
- Data center build-outs drive demand for transformers, cables, and HVDC,
- Governments and utilities are stepping up grid investment plans.
That means even if the pace of AI hardware orders slows,
power infrastructure spending is unlikely to fall off a cliff.
➡ As a result, these names are increasingly seen — by both foreign and domestic pros —
as “core AI enablers” rather than just traditional utilities or industrials.
📘 Conclusion: This Is the Start of a Structural Opportunity, Not Just a Scare
— How to think about strategy in the middle of volatility
The foreign selling wave in November 2025
is less about “Korea breaking down”
and more about a global adjustment phase in tech and AI.
At the same time, several key conditions
for a renewed foreign inflow
are gradually falling into place:
- AI infrastructure CAPEX set to re-accelerate in 2026,
- New demand from memory generational shifts (HBM and beyond),
- Implementation of Korea’s Value-Up policies,
- Governance improvements (dividends, buybacks, ROE),
- And a medium-term upcycle in semiconductors.
➡ Seen through that lens,
this isn’t just a “sell-off phase,”
but a period where the market is quietly laying the groundwork
for the next leg higher.
📌 A Practical Checklist for Investors
(This is broadly how many institutional investors track the market.)
- KRW–USD around the ₩1,400s → consider raising exposure to overseas ETFs and U.S. stocks
- AI and semiconductor leaders → stick to staggered buying to control risk
- Dividend and value stocks → tend to lead in a stable rate environment
- Power, cable, and HVDC names → core beneficiaries of long-run AI infrastructure
- Monitor the five leading indicators for foreign inflows every week
- Track MSCI index rebalancing dates
- Keep an eye on global manufacturing PMI trends
Used together, this checklist can help you cut through noisy headlines
and stay focused on the underlying direction of the market.
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