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By Lee Min-hyung
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The investors net sold 3.54 trillion ($3 billion) worth of stocks in November, the largest monthly sell-off this year. The figure is a steep increase compared to a month ago when they sold off 220 billion won in shares.
The move comes amid growing concerns that major local manufacturing firms, particularly large-cap semiconductor makers, will fall victim to deepening trade uncertainties between the world's two largest economies, analysts said.
Washington and Beijing are in a year-long trade spat. Starting last month, both sides showed signs of a ceasefire, after they said they hope to reach a partial "phase one" deal to relax the deepening dispute.
But with U.S. President Donald Trump signing two bills in support of Hong Kong's pro-democracy protestors, Nov. 27, expectations of a potential "ceasefire" in the trade row have become dimmer, according to market experts.
"Chances are high that negotiations on the first phase trade deal between the U.S. and China will remain in a stalemate," Park Sang-hyun, an analyst at HI Investment & Securities, said.
China does not want the U.S. to meddle in the ongoing Hong Kong crisis, with the Chinese government expressing discomfort over Trump's recent movement by summoning a U.S. diplomat in China.
"If the Hong Kong crisis continues and destabilizes the country's financial market, this will have a negative impact on the recovery of the Korean economy which is driven by exports," Park said. "Hong Kong is the second-largest market in terms of Korea's chip exports."
Korean industry is heavily reliant on exporting high-tech materials, such as memory chips and display panels.
Last month, foreign investors sold off Samsung Electronics shares worth of 941 billion won. They also net sold 338 billion won of SK hynix shares during the same period. The two Korean companies account for about a quarter of the total KOSPI market capitalization.
Other companies that foreigners net sold included Naver, Hyundai Motor and LG Chem.
Yuanta Securities analyst Cho Byung-hyun said global trade uncertainty, driven by the dispute between Washington and Beijing, was the major factor driving foreigners' selling spree.
"The key reason behind foreign investors' selling binge is attributable to the delay of the first phase trade agreement between Washington and Beijing," the analyst said.
The agreement was widely expected to be reached in early November, but both sides have so far failed to finalize the deal.
