Foreign Capital Buying Spree Ignites Epic Rebound in Korean Stocks, Institutions Wary of "Dead Cat Bounce"

TechFlow reports that on July 31, after experiencing a continuous slump throughout July, the South Korean KOSPI index surged more than 17% intraday, setting a record for the largest single-day gain in history. Although some investors optimistically believe this rebound is a "signal flare" for a reversal in market trends, some market experts argue that the fragile structure of the South Korean stock market, which is easily affected by foreign capital flows and highly volatile, has been verified again, and this rebound may ultimately be just a "dead cat bounce".

Data shows that just over two minutes after the opening, the net purchase volume of Korean stocks by foreign capital reached 1.6 trillion won; by the close, foreign capital's cumulative net purchases for the day totaled 7.18 trillion won, setting a historical record. Meanwhile, South Korean individual investors net sold 8.2 trillion won, also setting a record for the highest single-day net sales in history.

Analyst Lee Chae-won stated, "It is currently difficult to determine whether this rebound is a temporary technical recovery or the starting point of an upward trend." "Ultimately, the key lies in the semiconductor cycle. As the market questions whether high operating profit margins can be sustained, investors should focus on whether semiconductor supply bottlenecks will persist after 2028 when making decisions in the next six months."

An asset management industry insider stated, "Retail investors who are trapped at the current high levels are likely to sell to lock in profits when the index approaches the previous highs around 8,000 to 9,000 points, thereby suppressing the upward trend."