Foreign investors' buying spree sparks epic rebound in South Korean stocks; institutions warn of a "dead cat bounce"

After a prolonged slump throughout July, South Korea’s KOSPI index surged more than 17% intraday on the 31st, notching its largest single-day gain in history. While some optimistic investors view this rally as a "signal flare" for a market trend reversal, market experts argue that the fragile structure of South Korea’s stock market—vulnerable to foreign capital flows and prone to extreme volatility—has been reaffirmed, and this rebound may ultimately be nothing more than a "dead cat bounce." Data shows foreign investors net-purchased 1.6 trillion won worth of South Korean stocks just over two minutes after the market opened; by the close, their total daily net purchases hit 7.18 trillion won, a new all-time high. Meanwhile, South Korean individual investors net-sold 8.2 trillion won, also setting a record for the largest single-day net sell-off. Analyst Lee Chae-won stated: "It is currently difficult to determine whether this rebound is a temporary technical rebound or the start of an upward trend." "Ultimately, the key lies in the semiconductor cycle. As the market questions the sustainability of high operating margins, investors should focus on whether semiconductor supply bottlenecks will persist beyond 2028 when making decisions over the next six months." An asset management industry source noted: "Retail investors trapped at current high levels are likely to sell to lock in profits when the index approaches its previous highs of around 8,000 to 9,000 points, which could cap the upward momentum."