|

South Korea: Retail support and FX divergence – BNY

BNY’s Geoff Yu highlights that South Korean equities have delivered exceptional returns in 2026 while institutional investors remain net sellers, particularly from the Americas. KRW FX volumes are elevated, but the won has weakened against the Dollar, pointing to hedging and profit-taking rather than fresh inflows. Retail investors are the key marginal buyers, raising concentration and regulatory risk.

Equity gains versus weak KRW

"Cross-asset volumes back that up. In South Korea, KRW activity picked up sharply as the rally extended, but FX never confirmed the equity move. Despite the KOSPI rising more than 110% year to date, the won weakened by about 6% against the U.S. dollar."

"South Korean equities saw $17.25bn of net institutional outflows year to date through June 2026. The Americas drove the move, accounting for $15.65bn of net selling, or nearly all of the global total. U.S. institutions were the biggest sellers by far, responsible for 72% of all South Korean equity sales globally year to date."

"Retail is the marginal buyer. Retail investors have become the key marginal buyers in South Korea. Free from ownership caps and benchmark constraints, they kept adding to AI and semiconductor names even as institutions sold."

"Cross-asset activity makes the South Korea story clear. In forwards and swaps, cross-border KRW FX volumes averaged 1.23x normal year to date, with nine surge days above the 2.05x threshold – almost 8% of all trading sessions. June posted the highest KRW activity of the year at 1.90x normal volume, even though the KOSPI returned just 3.6% for the month."

"Watch the marginal buyer. There are signs South Korea’s retail flow impulse may be fading. The June 23 correction, with the KOSPI down 10% on the day, along with wider weakness in global tech, is likely to increase scrutiny of leveraged retail participation."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD hits eight-month lows below 0.6850 amid bullish USD

AUD/USD stays defensive below 0.6850, hitting an eight-month low in the Asian session on Thursday as the possibility of a steeper Fed rate hike in December helps the US Dollar hold near its highest level since April 2025. Geopolitical uncertainty also supports the safe-haven buck, while the RBA’s cautious, on-hold stance limits the Aussie.

USD/JPY eases from near 160.00 amid looming intervention risks, BoJ hike bets

USD/JPY retreats slightly from an over two-month high as the recent surge back to the 160.00 psychological mark prompted verbal warnings from Japanese authorities and sparked fears of direct FX intervention. Moreover, data showed that Japan’s wholesale inflation picked up again in October, strengthening the case for a BoJ hike in December and lifting the Japanese Yen. However, a bullish US Dollar, bolstered by odds of a jumbo Fed rate hike in December, could cap the pair's downside.



Gold shifts the focus to $3,800 amid stronger US Dollar

Gold comes under heightened downside pressure, retreating for the third consecutive day and approaching the $3,800 region per troy ounce on Thursday. Increasing speculation of a 50-bps rate hike by the Fed in December continues to weigh on the precious metal amid further gains in US Treasury yields.

Top Altcoins Price Forecast: Ripple, Cardano and Solana halt decline amid signs of exhaustion

Top altcoins, Ripple (XRP), Cardano (ADA), and Solana (SOL), hold steady on Thursday, halting the prevailing decline linked to hot US inflation data and the post-US midterms period.

Nvidia shares crash as Jensen Huang resigns as CEO
Nvidia (NVDA) shares collapsed in Thursday's premarket after longtime CEO and co-founder Jensen Huang resigned as CEO in the face of board scrutiny over several affairs. Nvidia shares have shed 10% at the time of writing as the leading AI chipmaker chose chief financial officer (CFO) Colette Kress as interim CEO.
What the US CPI headline doesn’t tell you about inflation

Brent crude has fallen about a third since mid-October on hopes the Iran war is ending, but diesel, freight and fertiliser costs haven't followed. Those costs reach US consumer prices in stages through 2027 and could keep inflation high after gasoline gets cheaper.