Foreign, Institutional Selling Tops 13.9 Trillion Won as KOSPI Sinks 4%

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.

1. Even With a Buyback Shield, Stocks Shaken by Rate and Oil Waves

Key summary: With the KOSPI plunging 3.99% to close at 6,562.72, foreign and institutional investors net sold a combined 13.9006 trillion won, using purchases of Samsung Electronics and SK hynix shares by other corporations as an opportunity to take profits. With the probability of a U.S. rate increase in September exceeding 70%, risk aversion is spreading. Global fund outflows are materializing, with August net inflows into EWY down 92.3% from the previous month and 1.5257 trillion won pulled from a DRAM ETF. Kim Seok-hwan, an analyst at Mirae Asset Securities, said, "If the high-rate environment continues, there is a high possibility that foreign profit-taking pressure on large-cap semiconductor stocks will persist."

2. U.S.-Born 'Rate Tsunami' Hits Korea's Low- and Middle-Income Households and Stretched Home Buyers First

Key summary: The U.S. 10-year Treasury yield jumped into the 4.8% range, its highest since early last year, and the 30-year yield hit 5.27%, a record high since June 2007. Japan's 10-year yield also topped 3%, its highest level in 30 years since 1996, as the surge in global long-term rates spills over into upward pressure on domestic market rates. The domestic 10-year government bond yield stood at 4.418% that day, and forecasts have emerged that mortgage rates could quickly enter the 8% range if a further rate increase by the Bank of Korea materializes. Household debt in Korea currently stands at 2,019.8 trillion won, and analysts say rising rates could translate into broad downward pressure on asset prices, including real estate and equities.

3. KOSPI Loses Steam Despite 'Other Corporation' Defense, Closing 4% Lower at 6,500 Level

Key summary: With Samsung Electronics and SK hynix moving to acquire 15 trillion won and 40 trillion won of their own shares, respectively, other corporations have net bought more than 1 trillion won for 10 consecutive trading sessions, but that was not enough to absorb the combined selling by foreign and institutional investors. Foreign investors net sold 1.9096 trillion won and institutions 2.0438 trillion won that day, dragging the KOSPI down 273.08 points, or 3.99%. Top market-cap stocks fell across the board, including Samsung Electronics (-4.02%), SK hynix (-4.73%), SK Square (-7.97%) and Hyundai Motor (-5.62%). Lim Jeong-eun, an analyst at KB Securities, said risk aversion strengthened under pressure from high rates and high oil prices.

4. AIDC Revives Battery ETFs, Soaring 30% in a Month

Key summary: As money rotated out of semiconductor shares amid their correction, TIGER Secondary Battery TOP10 Leverage surged 45.88% over one month, while KODEX Secondary Battery Industry Leverage rose 38.99% over the same period. Analysts say momentum beyond simple sector rotation is forming as energy storage systems emerge as a new source of battery demand after electric vehicles, driven by rising power demand from the spread of AI data centers. The North American ESS market grew 83% in the first half of this year from a year earlier, and LG Energy Solution's share expanded more than threefold over the same period, to 13.6% from 4.2%. As the United States designated ESS as core national security infrastructure and placed it under supply chain management, barriers to entry for Chinese products have risen, raising expectations that Korean companies with North American production bases will benefit.

5. Alteogen Does It Again, Licensing Technology to Novartis for 4.4 Trillion Won

Key summary: Alteogen signed an option and license agreement with Novartis for the development and commercialization of subcutaneous formulation drugs based on its Hybrozyme technology, sealing a technology export deal worth up to $3.223 billion (about 4.4165 trillion won). The contract is Alteogen's second largest ever and its fourth technology export this year, standing out as unusually good news in a falling market. Novartis secured exclusive rights to develop and commercialize SC formulations for multiple products using ALT-B4, and royalties based on net sales will be received separately after commercialization. Analysts say consecutive contracts with global big pharma continue to provide commercial validation of the Hybrozyme platform technology.

6. Forced Liquidations Jump 13-Fold in Market Correction, Averaging 43.86 Billion Won a Day in July

Key summary: In July, when the market correction began in earnest, the average daily value of forced liquidations at 10 domestic brokerages was 43.868 billion won, a 13-fold increase from 3.377 billion won a year earlier and the highest level since the tally began in 2022. The backdrop is a sharp increase in leveraged investing, including margin loans and loans secured by deposited securities. When forced liquidations cluster, mechanical selling floods the market, raising concerns about a vicious cycle that accelerates further index declines. Newly registered individual professional investors totaled 11,173 from January to July this year, approaching last year's annual figure of 12,228, showing a rapid increase in investors in high-risk products. Park Sung-hoon, a lawmaker of the People Power Party, urged that effective investor protection measures be prepared quickly to prevent forced liquidations and chain losses.

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