Key Takeaways
- • Foreign investors net sold 26 trillion won in Korean securities over 13 trading days from September 28 to October 16, according to the Korea Exchange, net buying on only two days (October 1 and 16).
- • Samsung Electronics fell 17.8% and SK Hynix fell 24.3% in the week of October 12–16, their largest weekly declines since the 2008 global financial crisis.
- • Goldman Sachs data shows hedge funds net sold a global AI stock basket of semiconductor, data center and power names from October 8 to 14, the second-fastest pace in the past year, liquidating positions built since early last year.
- • Foreign ownership of KOSPI market capitalization fell to 37.38% on October 16, the lowest level in six months.
- • Securities analysts describe the selloff as a sentiment and liquidity problem rather than a fundamentals collapse, with KOSPI trading at a 4.9x forward P/E versus 19.3x for the U.S.
Summary
Foreign investors have sold 26 trillion Korean won of domestic securities over 13 trading days from September 28 to October 16, according to the Korea Exchange, as hedge fund liquidations revived fears that had roiled global markets in the summer. Foreigners made net purchases on only two of those sessions, October 1 and October 16.
The selling hit Korea's two largest semiconductor companies hardest. In the week of October 12–16, Samsung Electronics fell 17.8% and SK Hynix fell 24.3%, the top two chipmakers' largest weekly declines since the 2008 financial crisis. Foreign ownership of KOSPI market capitalization slipped to 37.38% on October 16, its lowest level since April 9.
The article links the selling to rumors on October 15 (U.S. time) that AI-focused hedge fund Value Align Research Advisors (VARA), founded last year by former BlackRock executive Ben Hosking and trader David Field, was liquidating losing positions. As of end-June, VARA reportedly held large stakes in Bloom Energy and Nebius (about $1.7 billion each), CoreWeave (about $1.1 billion), and Micron, SanDisk and Seagate. The article also recalls the July collapse of Situational Awareness, the fund run by Leopold Aschenbrenner, which had used up to four times leverage and was forced to sell its public equities to Citadel at a discount. During the July fallout, foreigners net sold 11.9005 trillion won of KOSPI stocks over four sessions (July 24–29), and the index fell 17.2% over three sessions from July 28 to 30.
Beyond individual funds, Goldman Sachs data cited in the article shows hedge funds net sold a global AI basket from October 8 to 14, unwinding all positions accumulated since the start of last year. Selling of existing holdings was 3.5 times the volume of new short sales. Proceeds reportedly rotated into defensive sectors such as healthcare and consumer staples. The Korea Capital Market Institute attributed the pressure to rising government bond yields, doubts about AI profitability, and major funds taking profits ahead of year-end settlements in late October.
External risks also weighed on sentiment. Investors are reducing risk ahead of the U.S. midterm elections on November 3, which the article notes have historically been among the weakest and most volatile years of a presidential term. Renewed military tension with Iran and higher oil prices have added to pressure from interest rates, which could raise funding costs for data center operators such as CoreWeave.
Securities firms, including Korea Investment & Securities, say the market reflects lost momentum rather than broken fundamentals. As of October 15, KOSPI-listed companies traded at 4.9x forward earnings, well below the U.S. (19.3x), Japan (15.6x) and Taiwan (18.8x). The main constraint, analysts say, is a lack of buyers: Samsung Electronics completed a 15 trillion won buyback on October 6, and SK Hynix is expected to finish a 40 trillion won buyback around October 20. Analysts see a return of foreign investors as the key to a rebound, with the end-of-October earnings and shareholder return announcements from Samsung and SK Hynix, the U.S. midterm elections, and Anthropic's IPO in mid-November as the next catalysts.
The selling hit Korea's two largest semiconductor companies hardest. In the week of October 12–16, Samsung Electronics fell 17.8% and SK Hynix fell 24.3%, the top two chipmakers' largest weekly declines since the 2008 financial crisis. Foreign ownership of KOSPI market capitalization slipped to 37.38% on October 16, its lowest level since April 9.
The article links the selling to rumors on October 15 (U.S. time) that AI-focused hedge fund Value Align Research Advisors (VARA), founded last year by former BlackRock executive Ben Hosking and trader David Field, was liquidating losing positions. As of end-June, VARA reportedly held large stakes in Bloom Energy and Nebius (about $1.7 billion each), CoreWeave (about $1.1 billion), and Micron, SanDisk and Seagate. The article also recalls the July collapse of Situational Awareness, the fund run by Leopold Aschenbrenner, which had used up to four times leverage and was forced to sell its public equities to Citadel at a discount. During the July fallout, foreigners net sold 11.9005 trillion won of KOSPI stocks over four sessions (July 24–29), and the index fell 17.2% over three sessions from July 28 to 30.
Beyond individual funds, Goldman Sachs data cited in the article shows hedge funds net sold a global AI basket from October 8 to 14, unwinding all positions accumulated since the start of last year. Selling of existing holdings was 3.5 times the volume of new short sales. Proceeds reportedly rotated into defensive sectors such as healthcare and consumer staples. The Korea Capital Market Institute attributed the pressure to rising government bond yields, doubts about AI profitability, and major funds taking profits ahead of year-end settlements in late October.
External risks also weighed on sentiment. Investors are reducing risk ahead of the U.S. midterm elections on November 3, which the article notes have historically been among the weakest and most volatile years of a presidential term. Renewed military tension with Iran and higher oil prices have added to pressure from interest rates, which could raise funding costs for data center operators such as CoreWeave.
Securities firms, including Korea Investment & Securities, say the market reflects lost momentum rather than broken fundamentals. As of October 15, KOSPI-listed companies traded at 4.9x forward earnings, well below the U.S. (19.3x), Japan (15.6x) and Taiwan (18.8x). The main constraint, analysts say, is a lack of buyers: Samsung Electronics completed a 15 trillion won buyback on October 6, and SK Hynix is expected to finish a 40 trillion won buyback around October 20. Analysts see a return of foreign investors as the key to a rebound, with the end-of-October earnings and shareholder return announcements from Samsung and SK Hynix, the U.S. midterm elections, and Anthropic's IPO in mid-November as the next catalysts.
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