Foreign stock ownership in Korean stocks highest in nearly 6 years

SEOUL, January 04 (AJP) -Foreign ownership of South Korean stocks climbed to its highest level in nearly six years by the end of December 2025, as global investors doubled down on an AI-driven memory-chip boom led by Samsung Electronics and SK hynix, while bond inflows accelerated ahead of South Korea’s inclusion in a major global sovereign bond index.

According to the Korea Center for International Finance (KCIF) on Sunday, foreign ownership accounted for 32.9 percent of Korea’s total stock-market capitalization at the end of December, the highest level since April 2020.

The Financial Supervisory Service previously reported foreign ownership at 31.5 percent in April 2020 and 29.6 percent at the end of November last year. The official end-December figure has yet to be released. 

Foreign investors’ net buying in the electrical and electronics sector reached 4.5 trillion won in December, exceeding overall foreign net buying of 3.5 trillion won, the KCIF said. 

By stock, SK hynix attracted 2.2 trillion won in net foreign inflows, while Samsung Electronics drew 1.4 trillion won.

Foreign ownership of SK hynix rose to 53.8 percent at the end of December, up from 53.2 percent a month earlier, while Samsung Electronics edged up to 52.3 percent from 52.2 percent.

The KCIF attributed the surge in equity inflows primarily to tight memory-chip supply and rising prices, which are lifting earnings expectations for Korean chipmakers amid the global AI investment cycle.

Nomura recently forecast that commodity memory prices could rise another 20 to 30 percent this year, raising its estimates for annual operating profit by 21.5 percent for Samsung Electronics and 9.7 percent for SK hynix.

The center also pointed to valuation differentials as a key driver of foreign inflows.

While foreign investors were net sellers of Taiwanese stocks by $1.6 billion in December, they were net buyers of South Korean equities. Taiwan’s 12-month forward price-to-earnings ratio stands at around 17, above its 10-year average of 14.7, while the Kospi trades near 10, broadly in line with its long-term average, the KCIF said. 

Expectations for policies aimed at boosting corporate value, including a third revision to the Commercial Act and potential changes to dividend taxation, also supported investor sentiment.

Foreign money flowed strongly into bonds as well. In December, foreigners made net investments of 8.8 trillion won in Korean bonds, lifting total foreign bond holdings to 339.3 trillion won, up from 329.5 trillion won at the end of November. 

Korea’s long-anticipated inclusion in the FTSE World Government Bond Index is set to begin in April 2026 and conclude in November 2026, with the weighting added in eight equal monthly steps. 

The inclusion had originally been scheduled to start in November 2025, but FTSE Russell postponed the timeline to 2026.

The WGBI, compiled by FTSE Russell, is regarded as a benchmark “developed-market” sovereign bond index, with stringent criteria covering outstanding issuance, credit ratings and market accessibility. 

The Korean government expects WGBI inclusion to help attract advanced-economy capital, stabilize fiscal management, reduce government borrowing costs, and enhance financial-market stability and external credibility. 

The National Pension Service, the country’s largest institutional investor, has previously estimated that WGBI membership could draw at least $56 billion into South Korea’s financial markets.