The most crowded trades are often the most dangerous, while the most panicked moments are often the most valuable. I am now watching for an entry opportunity in South Korean stock ETFs.

First, some key data: Foreign ownership of Samsung Electronics has fallen to 46.37%, the lowest since July 2009 and roughly a 17-year low; foreign ownership of SK hynix has fallen below 50% for the first time since 2023. Foreign investors have withdrawn a net $131 billion from South Korean stocks this year, while trading volume in the Korean stock market has plunged 70% from its late-May peak.

When everyone is running in the same direction, it often means a reversal is not far away.

Both Goldman Sachs and UBS pointed out after the sharp decline in South Korean stocks in July that current valuations now offer a favorable risk-reward ratio. South Korean regulators have also explicitly rejected the notion that “the Korean market is uninvestable,” noting that South Korea’s economy grew 3.7% year on year in the second quarter, its current-account surplus in May hit a record high, and the total full-year earnings forecast for listed companies has risen rather than fallen.

One overlooked signal: Samsung and SK hynix’s combined 55 trillion Korean won buyback programs are expected to exhaust their funds by mid-October. Once buybacks, the “only net buying force,” exit, there could still be one final wave of selling pressure in the short term. Conversely, when buybacks end and foreign selling is also nearing its conclusion, the supply-demand dynamics could undergo a fundamental shift.

Kim Jae-seung, a researcher at Hyundai Motor Securities, expects South Korean stocks to begin a year-end rebound after November, as large-scale foreign selling reduces the “price burden” on Samsung and SK hynix, while concerns over U.S. interest-rate hikes ease.

I do not recommend buying individual stocks directly—Samsung and SK hynix together account for more than half of the KOSPI’s weighting, creating excessive concentration risk. But EWY, a U.S.-listed South Korea ETF, focuses on a memory-chip strategy, while FLKR covers a broader range of South Korean industries, including defense, finance, and biomedicine, making them relatively diversified entry tools.

My strategy is to establish a small starter position, wait for the selling pressure following the end of the buybacks to be fully released, and then gradually increase my holdings.
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