Foreign Flow Watch: Foreigners Sold the KOSPI but Bought the Chip Giants — Week of July 24, 2026

The KOSPI just posted the worst month in its history — down roughly 23% in July, a record run of circuit breakers, a quarter of the index’s value gone. Foreign investors have pulled out on a scale not seen since 2008. And yet, when you stop reading the index and start reading the tape stock by stock, a stranger picture appears: over the final five sessions of the week, foreigners were net buyers of Samsung Electronics and SK Hynix. This is the week the “Sell Korea” headline and the actual order flow stopped agreeing.

This is Foreign Flow Watch, our weekly read of where global capital is actually moving inside Korea’s export champions — and, where it matters, what the original Korean regulatory filing behind the move literally says. For last week’s edition, see Foreign Flow Watch — Week of July 21. For the mechanics of why these flows move prices at all, start with our pillar, How Foreign Flows Move Korean Stocks.

📉 The Backdrop: Korea’s Worst Month on Record

The setup matters, because it makes the flow data below counterintuitive. July 2026 was the worst month in KOSPI history. The index fell roughly 23%, set off a record run of circuit breakers (the seventh of the year came on July 13, with more mid-month), and erased about ₩250 trillion in market value, sliding from a late-June peak above 9,100 to near 6,875 by Friday’s close — a drop of about 25% from the top, deep into technical bear-market territory.

Foreign investors have been the marginal seller. They have net-sold roughly ₩160 trillion (about $108 billion) of KOSPI stock year-to-date — the heaviest since the 2008 global financial crisis — including some ₩12.1 trillion in July alone through Thursday. On Friday July 24, foreigners sold a net ₩860bn and institutions ₩347bn, while domestic retail investors absorbed the drop, net-buying ₩121bn. The stated drivers: a reassessment of AI-chip demand, a cooling crypto cycle, and a weak won.

📊 The Scoreboard: Who Foreigners Bought and Sold

The table below ranks our export-champion watchlist by net foreign flow over the five trading sessions to Friday July 24 (share counts from KRX/Naver Finance; USD values are approximate, converted at Friday’s close and ₩1,478/$). We show the 20-day trend alongside it — because the one-week story only makes sense against the month behind it.

Two things jump out. First, the 5-day and 20-day columns disagree on the chip giants: foreigners have been heavy net sellers of Samsung and SK Hynix all month (−37.8M and −5.35M shares over 20 days), but flipped to net buyers in the final five sessions. Second, the week’s genuine foreign outflows were narrow — Hyundai Motor and KAI — not the broad memory dump the headlines imply.

One more distinction the index number hides: the heaviest sellers of Samsung and SK Hynix this week were domestic institutions, not foreigners. On the KRX daily tape, institutions net-sold roughly 4.9M Samsung and 1.4M SK Hynix shares over the five sessions — even as foreigners were net-buying the same names. Reading the foreign and institutional columns separately, rather than the single “net” headline, is exactly what the “foreigners flee Korea” story flattens.

🤔 Why Are Foreign Investors Buying Korean Chip Stocks in a Crash?

Foreign investors turned net buyers of Samsung Electronics and SK Hynix — the two Korean stocks global funds reach for first — over the week because a month of relentless selling had reset their valuations to levels that look cheap on the fundamentals — SK Hynix trades at about 29× earnings after growing operating profit 101% in 2025, and both stocks sat roughly 30–40% below their 52-week highs by Friday. When an index falls 23% in a month, the last, most-liquid names are sold to raise cash regardless of merit; when the panic pauses, those same liquid names are the first repurchased.

The fundamentals underneath the memory pair remain the strongest on the board. SK Hynix grew FY2025 revenue 46.8% to ₩97.15 trillion and operating income 101.2% to ₩47.21 trillion, a 48.6% operating margin driven by AI-memory (HBM) demand. Samsung’s FY2025 operating income rose 33.2% to ₩43.60 trillion. Neither is a broken business — they are cyclical AI plays caught in a market-wide liquidation. For the deeper structural case, see Korea’s Chip Supercycle and our Samsung Electronics valuation. SK Hynix’s freshly listed Nasdaq line (see its $26.5B Nasdaq debut) gives global funds a second venue to express the same view.

🛡️ The Corporate Answer: Woori’s Triple Value-Up Filing

The most telling corporate response to the crash came not in a press release but in a DART regulatory filing: on July 24 — the worst session of the month — Woori Financial Group used a single board meeting to authorize a ₩150 billion buy-and-cancel (repurchasing shares over six months to permanently retire them) plus a ₩220 quarterly dividend — roughly ₩310 billion of total capital return, all at once. This is the language-arbitrage payload of the week, so here is exactly what the original Korean filings say.

1. The buyback (자기주식취득 신탁계약). Woori’s major-matters report discloses a ₩150.0 billion treasury-share acquisition trust contract, signed with Korea Investment & Securities, running from July 24, 2026 to January 22, 2027. At the July 23 closing price of ₩30,900, that funds roughly 4,854,368 shares. A “trust contract” means Woori hands the broker a fixed budget to buy shares in the open market over six months — a pre-committed, disclosed buy program, not a discretionary one.

2. The cancellation (주식소각). A separate filing states Woori will cancel those 4,854,368 common shares — about 0.67% of its 728,089,682 shares outstanding. The filing cites Article 343(1) of the Commercial Act: the shares are retired out of distributable profit, so the share count falls but paid-in capital does not. Critically, this is a buy-and-cancel, not a buy-and-hold. Shares bought back are permanently destroyed, not parked in treasury to be quietly resold later — the distinction that separates a genuine return of capital from optics.

3. The dividend (현금배당). The same board declared a ₩220-per-share quarterly cash dividend, ₩160.2 billion in total, with an August 10 record date and August 31 payment. Stack it up: in one sitting, Woori committed roughly ₩310 billion — buyback plus dividend — back to shareholders on the day the market feared capital was fleeing Korea entirely.

And it did this from strength, not desperation. The same day, Woori’s preliminary Q2 2026 results showed operating income of ₩1.32 trillion, up 18.7% year-on-year and 62.8% from Q1. This is a profitable bank at about 7× earnings and a 4.4% trailing dividend yield choosing to shrink its own share count into a panic.

🏛️ Governance & Shareholder Returns: The Value-Up Signal Under the Panic

Woori’s filing is a textbook artifact of Korea’s Value-Up reform — the policy push to close the “Korea Discount” by pressing companies to return capital and cancel treasury stock rather than hoard it. What changed the incentive is legal, not cosmetic: Korea’s third Commercial Act amendment has tightened the treatment of treasury shares, and the market response is measurable. Treasury-share cancellation filings have now overtaken disposal filings since the amendment passed — a reversal of the old Korean habit of buying back stock only to reissue it to insiders.

Woori is not alone this week, and the contrast between two filings is instructive:

Yuhan Corporation — the pharma name behind the lung-cancer drug lazertinib licensed globally to Johnson & Johnson — went further in one respect: on July 23 it filed to cancel ₩425.3 billion of stock it already holds (6,031,820 common plus 32,600 preferred shares), roughly 7.6% of its common shares, effective July 31. Because the shares are already owned, the reduction is immediate rather than spread over a six-month buy window. The stock rose about 7% on the news even as the index fell. Two mechanisms, one message: Korean boards are now using the crash as cover to permanently shrink share counts.

⚠️ Bear Case: Is This Selling Structural or Cyclical?

The honest answer is: mostly cyclical, with a structural tail risk that buybacks alone can’t fix. The cyclical read is the stronger one. A 23% one-month drop with the fundamentals intact — SK Hynix’s margins near 49%, Woori’s profit up 19% — is the signature of a liquidity-driven de-rating, not a solvency crisis. Foreign selling this severe (heaviest since 2008) tends to exhaust itself, and some domestic brokerages are already calling for a late-July rebound.

The structural risk is real, though. The won is weak, which mechanically erodes dollar returns for foreign holders and can keep them selling regardless of local valuations. The AI-memory cycle that powered SK Hynix’s 101% profit surge is exactly the kind of demand that can be “reassessed” downward fast. And buybacks funded from a single strong quarter are a floor, not a catalyst — they slow the bleeding without changing why global capital left. A buy-and-cancel is meaningfully bullish for per-share value; it is not a substitute for the AI-demand narrative holding up.

🔭 Next Week’s Watch Points

• Does the chip net-buy stick? One week of foreign buying in Samsung and SK Hynix is a data point. Two consecutive weeks would start to look like a turn.
• More buy-and-cancel filings. Watch DART for large-cap treasury-share cancellations. Each one that retires shares (not just parks them) is a Value-Up vote of confidence — and a language-arbitrage story we’ll read for you.
• The won. A stabilizing won removes the mechanical reason foreigners sell; further weakness keeps the pressure on regardless of valuation.
• Defense divergence. Foreigners sold KAI and Hanwha Aerospace but bought LIG this week. Whether that’s rotation or noise is next week’s question.

📚 Lingo Check

🎯 Why It Matters for K-Export Stars

The whole thesis of this site is that Korea’s export champions are mispriced by a market that Western desks read only in translation and at the index level. This week is the cleanest illustration we’ve had. The English headline — “Korea crashes, foreigners flee” — was accurate and useless for a stock-picker. The stock-level tape said foreigners were reloading the two best businesses on the board, and the Korean-language DART filings said boards were permanently retiring shares into the fear. Reading the index gets you the panic; reading the filing gets you the signal. That gap is the entire edge.

Disclaimer: This article is for informational and educational purposes only and is not investment advice, a recommendation, or a solicitation to buy or sell any security. Figures are drawn from public sources (KRX/Naver Finance, DART filings, company disclosures) believed reliable but not guaranteed; foreign-flow USD values are approximate conversions and one-week flows are volatile. Markets carry risk, including loss of principal. Do your own research and consult a licensed financial adviser before making investment decisions.