‘No Cash Left to Average Down’: Retail Investors Reel as Kospi Nears a Break Below 6,000

Retail investors’ average daily net buying plunges to 1.545 trillion won from 3.562 trillion won

Earnings improve, but no new buyers emerge, sapping rebound momentum

Concern is growing that the Kospi could break below 6,000 as South Korea’s retail investors run out of firepower after months of absorbing heavy foreign selling. With trading value also shrinking sharply, there are few obvious buyers left to prevent further declines, raising concerns that the market’s demand cushion is giving way.

According to EpicAI, an AI-based investment information platform, foreign investors were net sellers of more than 1 trillion won a day on 26 trading days in May and June in the Kospi market. The Kospi fell on 11 of those days, but rose on 15.

The index was relatively resilient even on days when foreign selling topped 3 trillion won. On May 13, foreigners were net sellers of 3.7227 trillion won, but the Kospi rose 2.63%. On May 18, the index gained 0.31% despite 3.6492 trillion won in net selling. On June 30, foreigners dumped 3.7992 trillion won worth of shares, yet the index still climbed 0.97%.

More recently, however, the picture has changed. On September 14, foreign investors were net sellers of 3.3375 trillion won, sending the Kospi down 3.26%. On September 28, the index fell 2.70% as foreigners sold 3.2682 trillion won. From September through October 13, the Kospi fell on 14 of the 15 trading days when foreign investors posted net selling of more than 1 trillion won.

The key difference is that domestic investors are no longer buying aggressively enough to absorb the foreign outflows. On days when foreigners were net sellers of more than 1 trillion won, retail investors were net buyers of 3.562 trillion won a day on average in May and June. That dropped to 1.545 trillion won in September and October, less than half the earlier pace.

Institutions are no longer providing support either. Under the same conditions, they were net buyers of 280 billion won a day on average in May and June, but turned into net sellers of 390 billion won in September and October. In the first half, retail and institutional investors absorbed foreign selling together. More recently, both groups have weakened at the same time.

Trading across the broader market has also slowed sharply. Average daily trading value on the Kospi stood at 50.3 trillion won in May and June, but dropped 57% to 21.4 trillion won in September and October. Compared with May 29, when trading value climbed as high as 80.3 trillion won, the recent daily average is down more than 70% from the peak.

Brokerages say a rebound will be difficult because individuals have already poured substantial sums into the market and have little capacity left to buy more. Many retail investors are sitting on losses from the 7,000-8,500 range, and the Kospi has failed to close above 7,100 since July 15, when it ended at 7,284.41.

LS Securities estimates that individuals have put about 195 trillion won into the stock market since July 2024, and that liquidity assets held by households and nonprofit organizations have fallen from a year earlier for the first time since the global financial crisis as money shifted into investments. Jeong Da-woon, an analyst at LS Securities, said both retail investors and domestic institutions have limited buying capacity. Foreign net selling, he added, is now amplifying price swings.

Analysts say it will be difficult to generate a sustained rebound before foreign flows stabilize. Institutions such as the National Pension Service are often mentioned as potential buyers, but their room for large-scale purchases is constrained because they have already used up much of their domestic equity allocation.

Pension funds were net sellers of 433.1 billion won in September and sold another 39 billion won this month. Kim Seok-hwan, an analyst at Mirae Asset Securities, said strong earnings can help put a floor under the market, but it will be hard to create an uptrend without new buyers.

A senior executive at a brokerage in Seoul’s Yeouido financial district said the domestic market’s ability to buffer foreign selling has effectively reached its limit. Retail investors have already exhausted much of their available investment cash, while institutions have also turned into net sellers, making the demand vacuum increasingly apparent.

The plunge in trading value signals that risk appetite has not recovered enough to draw in bargain hunters. If foreign selling pressure does not ease, the executive added, a break below 6,000 on the Kospi will be only a matter of time.

Kang Kyung-ju, Hankyung.com reporter memory@hankyung.com