Record KOSPI Surge Met with Unprecedented Outflow from US-Listed Korea ETF
While South Korea’s KOSPI index broke through the 7,000 mark for the first time in history, the BlackRock iShares MSCI Korea ETF (EWY), listed in the US, experienced its largest-ever single-day outflow of about $409 million. This marks five consecutive sessions of net outflows from EWY, with total withdrawals now exceeding $900 million. The massive outflow is largely attributed to profit-taking after KOSPI’s extraordinary rise of over 75% this year, propelled by surging semiconductor stocks such as Samsung Electronics and SK Hynix.
Despite the sell-off in the ETF, foreign investors purchased large quantities of Korean stocks directly on the same day, reflecting ongoing international interest. Market experts suggest that now is a rational moment to reduce exposure, especially as some indicators point to an overheated market. Nonetheless, institutions like JPMorgan remain optimistic, even raising KOSPI’s year-end target to 8,500, amid robust demand for memory chips and AI-related growth. Overall, the divergence between ETF flows and direct investment highlights investors’ strategic rebalancing in light of recent rapid gains.
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