00:00if you hold korean stocks today's numbers could change what you're sitting on foreign investors may be signaling a turn
00:06and it has less to do with company earnings than with the exchange rate korean retail investors are also moving
00:12money abroad at the fastest pace this year
00:14and regulators just warned fund managers about how their products are being run it's monday november second let's look at
00:21what this means for retail investors in korea the one has strengthened sharply
00:25and that changes the math for foreign investors since january the korean stock market has been adjusted for the exchange
00:32rate and the picture looks different
00:34seoul economic daily analyzed 202 trading days this year and found that when the dollar adjusted cost be sat between
00:427000 and 8500 foreign investors sold more on average than when it sat outside that range
00:49here's what the numbers show on may 11th the cost be closed at 7822 on september 7th it closed at
00:576995 that's a gap of roughly 827 points
01:02but once you adjust both days for the exchange rate the gap shrinks to about 136 points the stronger one
01:09filled most of that difference foreign selling jumped sharply in both cases
01:13once the adjusted index moved back above 7500 in the second half of the year the pattern held when the
01:20adjusted index was above 7000 the previous day foreign investors were net sellers on 31 of 40 trading days or
01:2877.5 percent when it was below 7000 they sold on 42.9 percent of days at the current exchange
01:36rate of 1334.31 per dollar a dollar adjusted cost
01:41of 7000 corresponds to roughly 6478 on the nominal index that's the zone where foreign selling has tended to cluster
01:50so what does this mean for retail investors weighing their next move
01:54earlier we said the stock market may look cheap in one terms here's what that actually means for you a
02:00falling index in one can still look expensive to a foreign investor if the currency is rising at the same
02:06time you might be seeing a bargain
02:08they may be seeing something else watch the exchange rate as closely as the index meanwhile korean investors are buying
02:15u.s stocks at a record pace net purchases in october reached 5.4 billion dollars more than five times
02:23september's total nearly 55 percent went into a three times leverage semiconductor etf leverage products also dominated the list four
02:32leveraged etfs accounted for about 68 percent of the total leverage can amplify gains
02:38but it amplifies losses just as quickly finally the financial supervisory service has warned asset managers about how they operate
02:46etfs and money market funds it flagged return concentration in some corporate money market funds circular investing among etfs and
02:55advertising that promises future listings regulators say fines could follow before you buy any fund read the prospectus
03:03and understand what it actually holds what to watch the exchange rate the foreign flow and the fund you're holding
03:10that's today's ai prism retail investors this episode was produced with ai assistance based on sole economic daily reporting ai
03:20prism is a wan ifra award-winning series we'll be back tomorrow
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