Foreign buying resumes as hopes for Hormuz reopening lift Kospi

Foreign investors turned net buyers of Seoul stocks on Friday for the first time in more than two weeks, helping lift the Kospi as expectations grew that tensions linked to the Middle East conflict may ease.

Overseas investors bought a net 810 billion won ($537 million) worth of Kospi-listed shares, according to Korea Exchange data, snapping a 12-session selling streak during which they dumped a net 2.3 trillion won.

Signs of a turnaround had already emerged earlier in the week, with foreigners’ net selling narrowing from 3.84 trillion won on Tuesday to 640 billion won on Wednesday and 140 billion won on Thursday.

Friday’s gains appeared to reflect a relief rally as hopes for the reopening of the Strait of Hormuz revived risk appetite. Reports that Iran and Oman were working on a protocol for passage through the waterway helped ease fears of a prolonged disruption, even as oil prices remained elevated.

The benchmark index closed 2.7 percent higher at 5,377 on Friday. After rising as high as 5,419.45 in morning trade, the Kospi pared some gains and settled below the 5,400 mark as retail investors turned heavy sellers, offloading a net 2.1 trillion won worth of shares. Institutional investors bought a net 720 billion won, helping support the rally alongside foreigners.

Kospi heavyweights led the gains, with bellwether Samsung Electronics rising more than 4 percent and No. 2 SK hynix gaining 5.5 percent. Foreign investors diverged in their trading of the two chipmakers, selling Samsung Electronics while buying SK hynix.

Performance across other major stocks was mixed. Hyundai Motor rose 1.2 percent and Hanwha Aerospace added 2.3 percent, while LG Energy Solution fell 1.5 percent and Samsung Biologics dropped 2 percent.

That shift also eased pressure on the won, which had come under heavy strain in recent days as rising crude prices pushed it as low as 1,523.3 per dollar on Thursday.

As fears of a prolonged Hormuz blockade receded, the currency rebounded to close daytime trading at around 1,505 against the greenback, more than 14 won stronger than the previous session’s 1,519.7 finish after touching 1,504.7 intraday.

The tech-heavy Kosdaq also rose, gaining 0.7 percent to close at 1,063.75. Individuals bought a net 400 billion won, while foreigners and institutions remained net sellers.

Some market watchers said the recent foreign selling looked more like profit-taking in sectors that had already rallied than a broad retreat from Korean assets, potentially leaving overseas investors with more room to rotate if earnings momentum broadens beyond chips.

“Selling was heavy, but the change in foreign ownership was relatively limited, with the recent net selling also concentrated in sectors such as semiconductors where share prices had already risen,” KB Securities analyst Kim Min-gyu said.

Kim added that with foreign portfolios now lighter, their room to move has expanded. "Earnings upgrades, once concentrated in semiconductors, are beginning to appear in other sectors as well," he said, pointing to defense and aerospace, chemicals, batteries, entertainment and IT hardware, while also noting continued foreign interest in energy, nuclear-related plays, banks and trading companies.