South Korea Economics: Favorable Capital Flow Momentum for KOSPI

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South Korea Economics: Favorable Capital Flow Momentum for KOSPI

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31 Jul 2026 03:20:52 ET │ 13 pages

South Korea Economics

Favorable Capital Flow Momentum for KOSPI

CITI'S TAKE

We now see the evident signs of buy-on-dip capital flow for KOSPI. [1]

Foreign investors have purchased KOSPI equities around +KRW7.2trn on

July 31st, which would be the biggest single-day net purchase on the

record. [2] Tightened regulations on July 31st would limit retail investors’ Jin-Wook KimAC

access to single-stock-leveraged ETFs, likely moderating the volatility of +82-2-2077-4229

the KOSPI market. [3] Despite the market’s concerns on the Korea’s jinwook.kim@citi.com

National Pension Service (NPS)’s potential rebalancing, Korean

pension/funds have purchased KOSPI equities by KRW1.0trn in July (vs.

June: -KRW2.4trn; May: -KRW2.2trn).

[1] Foreign investors have purchased KOSPI equities around +KRW7.2trn on July

31st, which would be the biggest single-day net purchase on record. Foreign

investors’ monthly net selloff of KOSPI equities has significantly moderated to -

KRW9.8trn in July (vs. June: -KRW48.4trn; May: -KRW44.5trn). The KOSPI

correction has been mainly led by foreign equity investors’ selloff in terms of

rebalancing and profit-taking. Fund flow into KOSPI market and overseas KOSPI-

related passive ETFs has accelerated since the middle of July.

[2] Tightened regulations would limit retail investors’ access to single-stock-

leveraged ETFs, likely moderating the volatility of the KOSPI market. The Financial

Services Commission (FSC) tightened the regulations for retail investors’ access to

single-stock leveraged ETFs. Minimum deposit requirement increased from the

KRW10mn (mixed with equities and cash) to KRW30mn (only cash) from July 31st.