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Foreign investors, who have led Korea’s stock market rally in the second half of the year, now hold more than 30 percent of the nation’s total market capitalization after five consecutive months of net buying.

According to the Korea Exchange on September 25, foreigners owned 1,019 trillion won ($741 billion) worth of listed shares as of the previous day. This accounts for 30.75 percent of the combined market capitalization of the KOSPI, KOSDAQ, and KONEX markets (3,315 trillion won).

Foreign ownership had stayed below 30 percent for a year since September 13, 2024, after a prolonged sell-off. Between August 2023 and April 2024, overseas investors sold heavily, dragging their share down to as low as 28.23 percent in March.

But sentiment shifted in May, ahead of the inauguration of the new Korean government, as foreigners turned net buyers and have since maintained that stance for five straight months. This month alone, they purchased about 7 trillion won worth of large-cap and semiconductor stocks. The foreign ownership ratio, which stood at 29.46 percent at the end of August, climbed back above 30 percent on September 15 and has continued to rise.

Analysts say the buying trend is likely to persist despite concerns about concentrated demand in semiconductors. “Given how much they sold last year and earlier this year, the current ratio simply represents a return to the 10-year average,” said Kim Seok-hwan, researcher at Mirae Asset Securities.

He added that renewed foreign inflows since September are driven by expectations of improved semiconductor earnings under the accelerating AI investment cycle. “This could gradually raise the foreign share of Korea’s total market capitalization,” he noted.

Park Sang-hyun, researcher at iM Securities, stressed that while Korea’s stock index has hit record highs in won terms, it remains well below its peak in dollar terms. With the U.S. interest rate cut cycle now underway, the Korean won is expected to strengthen toward year-end, he said, providing global investors with more incentive to keep a positive outlook on Korean and other Asian equities.