Global Liquidity Shift Triggers Massive Exodus from Korean Equities

Foreign investors have sold nearly $14.5 billion worth of South Korean equities this month, including about $10 trillion this week, extending first-half outflows of roughly $170 trillion as global investors reposition portfolios ahead of diverging monetary paths in the United States and Japan.

The sustained selling suggests global liquidity conditions, not domestic valuations alone, are increasingly dictating capital flows into Korean assets.

The Federal Reserve and the Bank of Japan will deliver back-to-back policy decisions over the next two days, placing the world's two reserve-currency central banks at the center of global markets. While both are widely expected to leave interest rates unchanged, investors are focused on whether Fed Chair Kevin Warsh and BOJ Governor Kazuo Ueda signal further tightening.

The persistent foreign selling in Seoul is consistent with a gradual reallocation of capital as Japanese monetary policy slowly exits its ultra-loose era.