Foreign investors sold a net 3.485 trillion won of South Korean equities on the 19th, while institutional investors sold 1.324 trillion won. Individual investors bought 4.633 trillion won, absorbing much of the pressure. The selling came after foreign investors posted net purchases for five consecutive trading days from the 11th through the 18th, totaling 8.129 trillion won; the single-day sale represented 42.9% of that cumulative buying. Recent foreign inflows were concentrated in semiconductors, with about 87% of net purchases between the 12th and 18th directed to semiconductor shares, particularly Samsung Electronics and SK Hynix. On the 18th, foreigners bought only 91 billion won of South Korean stocks overall, but semiconductor shares attracted more than 1 trillion won, suggesting investors were targeting the AI-chip cycle rather than broadly restoring their appetite for South Korean equities. The shift was driven mainly by rapidly rising long-term government bond yields in the United States and Japan. The U.S. 30-year Treasury yield reached 5.337% intraday on the 18th, its highest level since 2007, while Japanese long-term yields also continued to rise, intensifying volatility across global bond markets. Analysts said the increase in long-term U.S. yields was linked less to expectations of renewed Federal Reserve rate hikes than to a widening U.S. fiscal deficit, heavier Treasury issuance and increased bond issuance by large technology companies to fund AI data-center investment. Because long-term yields have risen much more than short-term rates, markets have tended to interpret the move as an increase in the term premium, the extra return investors demand for holding longer-dated bonds. If U.S. and Japanese long-term rates remain elevated, foreign fund flows into South Korean equities could face further pressure. South Korea’s high export and semiconductor weighting makes its market sensitive to U.S. interest rates, the dollar and global liquidity, and foreign investors may continue taking profits in recently strong performers such as Samsung Electronics and SK Hynix. Other views hold that the rate shock may not develop into a sustained withdrawal of foreign capital. Treasury issuance pressure, a recent driver of higher U.S. long-term yields, could ease temporarily, while a cooling in U.S. inflation and geopolitical risks could pull the term premium lower and encourage renewed inflows into semiconductors with relatively predictable earnings. South Korea’s domestic market also has less capacity to absorb foreign selling. As of the 18th, deposits in South Korean investor accounts stood at 104.7551 trillion won, down significantly from about 130 trillion won at the end of June, while the balance of credit-trading financing was also below its June peak. The future direction of U.S. and Japanese interest rates will therefore remain a key variable for South Korean equity-market liquidity, Daum reported.