Korea's institutional investors have sold a net 3.558 trillion won ($2.986 billion) worth of local stocks since April on profit taking, the Korea Exchange (KRX) said Friday.

From April 1 to May 19, domestic institutions largely offloaded exporter stocks such as Samsung Electronics, LG Chem, Samsung C&T and POSCO. As a result, the benchmark Korea Composite Stock Price index (KOSPI) fell 1.4 percent to 1,946.78 from 1,973.57 during the cited period, KRX data showed.

Instead, they bought defensive stocks such as banks, insurers and telecom firms, keeping the main index from falling further.

"With a possible U.S. rate hike in June and weak Chinese economic indicators fueling uncertainties in the stock markets, a massive selling of local stocks by pension funds and fund managing firms took place in mid-April," Mirae Asset Daewoo analyst Kim Hyung-rea said.

The KOSPI was trading above the psychologically important 2,000 level from April 14-28, he said.

Investors will seek a cue from two major overseas events next month in their investment directions. Index provider MSCI Inc. will decide on whether to add China A-shares to its indices, and a British vote is scheduled to decide on whether to leave the European Union, analysts said.

"So the stock markets are set to remain volatile for the time being despite foreigners' recent net buying. Institutions will expand their net selling on profit taking if the KOSPI rebounds to 2,000," Kim said.

Foreigners bought a net 2 trillion won worth of Korean stocks from April 1 to May 19 on a revived appetite for riskier emerging-market assets following an expanded monetary easing in Europe, he said.

Hinting on a near-term rate hike, New York Fed President William Dudley said this week the U.S. economy is "on track to satisfy a lot of conditions" for a rate increase in June or July.

Last month, China's industrial-production and investment data didn't meet market expectations despite Beijing's aggressive monetary easing policies in the first quarter. (Yonhap)