BNY’s Geoff Yu highlights that institutional investors are exiting South Korean equities, contributing to the KOSPI’s brief bear-market move, while retail buyers still support the market. He notes concerns over AI and semiconductor concentration, questions the sustainability of retail support, and contrasts South Korea with more measured liquidation in Taiwan and ongoing interest in Chinese equities.

Institutional selling pressures KOSPI

"iFlow data suggest institutional investors are continuing to exit South Korean equities en masse, likely contributing to the KOSPI’s brief move into bear market territory overnight. Retail investors remain on the other side of the trade, but the market is increasingly questioning how sustainable that support is. Taiwanese equities have also benefited from the AI and semiconductor narrative, though liquidation there has been more measured in scale and pace, consistent with the relative resilience in index performance."

"In Asia, South Korea’s tech-led sell-off sharpened concerns around AI and semiconductor concentration. The KOSPI briefly flirted with bear market territory as Samsung Electronics and SK Hynix fell heavily, despite Samsung flagging a sharp quarterly profit rebound. That points to positioning, index concentration and stretched AI-linked expectations rather than weak current fundamentals."

"Single-stock ownership limits for active managers remain an important technical constraint. However, if valuations soften and institutional selling persists beyond what can be explained by this constraint, it could point to a broader behavioral shift rather than just position management. Meanwhile, our data show that interest in Chinese equities is holding up well, even as indices such as the HSCEI entered bear market territory a few weeks ago."

"It is too early to call this a rotation away from the growth markets of Taiwan and South Korea into value segments elsewhere in Asia. Still, within region-specific mandates, some funds appear to be searching for new investment destinations, which could drive greater dispersion in return profiles this quarter."

"Equities: Denmark, Hungary and India attracted the strongest inflows, while U.S., U.K., South Korean and Thai equities remained under selling pressure."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)