Markets Wait on Foreign Buyers as Cosmetics and K-Defense Fill the Rotation

Korea's stock market has recently settled into a rotational pattern in which money shifts from one stalled stock to another. Samsung Electronics, for instance, has struggled to break above the 200,000-to-220,000-won range, and with no new source of buying stepping in, capital simply circulates among names — prompting some market watchers to worry that no fresh buying force is emerging.

The hosts, however, said there was little need to worry about foreign flows specifically. Foreign investors have already sold so much over the past period that there is little room left for further large-scale selling. Global institutions such as JPMorgan and BlackRock have repeatedly named Korea their top pick within Asia when raising regional weightings, suggesting foreigners are likely to hold a larger share of the Korean market than they do now by year-end.

Domestic flows also look supportive. The National Pension Service has recently resumed modest buying of domestic equities, and — though further government-level discussion is still needed — a plan to convert Korea's roughly 400 to 500 trillion won retirement pension pool into a fund structure is moving forward, meaning even a partial inflow could bring hundreds of trillions of won in fresh capital. One lingering concern is that Korean retail money invested abroad has been slow to return home, while a wave of large U.S. IPOs still lies ahead, leaving outbound and returning flows roughly balanced.

Part of the ongoing intraday volatility was attributed to investor psychology. Even investors already sitting on gains chase still-higher returns, reacting sharply to minor news or earnings and shaking the market as a result. Foreign investors, the hosts noted, typically set a fixed daily order size and execute it regardless of price, whereas retail investors change their decisions based on price action — chasing rallies and delaying purchases after bad news — which amplifies volatility. Calming this pattern, they said, requires watching whether foreign capital is actually flowing back into the market.

A shift among retail investors from ETFs toward individual stocks was also flagged. KB Securities analyst Kim Min-gyu noted that when a strong market lifts ETF returns, investors tend to credit their own judgment, and once they spot individual stocks outperforming their ETFs, holding the ETF starts to feel like an admission of insufficient skill, nudging them toward direct stock-picking. The hosts stressed there's no need to chase this trend — what matters far more than the investment method is choosing something you can genuinely judge well.

The KOSPI fell as much as 1.5% early in the session, briefly slipping to the 6,300 level, as Samsung Electronics turned negative and SK hynix dropped roughly 3% amid selling in large-cap chip names. Both foreign and institutional investors turned net sellers, and buying from financial-investment accounts that had supported the market earlier in the session eased. The move was attributed largely to profit-taking by foreign investors in Samsung Electronics ahead of its earnings release.

Losses narrowed later in the broadcast, with the KOSPI stabilizing around the 6,460 level, down about 0.2%, while the KOSDAQ outperformed with a roughly 1.9% gain to 1,197 points — a rare case of the KOSDAQ beating the KOSPI. The won-dollar exchange rate held at 1,483 won, showing little sign of a sharp decline. Foreigners sold more than 1.1 trillion won net on the KOSPI, but on the KOSDAQ they were net buyers of nearly 600 billion won, also adding to futures and call-option positions.

Among individual names, long-neglected cosmetics stocks surged, led by small and mid caps, with a number hitting the daily upper limit and many posting double-digit gains. Where large branded names like Amorepacific and LG Household & Health Care once represented the sector, thousands of newer brands now sold through multi-brand retailers such as Olive Young typically operate without their own factories, relying instead on contract manufacturing. As a result, in this export recovery, attention has shifted toward the OEM/ODM manufacturers that actually produce the goods — Kolmar Korea, Cosmax, and Kolmar Korea's peer Cosmecca Korea among them.

Elsewhere in Asia, Taiwan's market stood out. Shares of TSMC's Taiwan-listed stock rose about 4 to 5%, lifting the Taiwan Weighted Index, after Taiwanese authorities announced they would ease single-stock investment caps for equity funds and active ETFs. Since TSMC accounts for roughly half of the index, the relaxed cap is expected to free up additional buying capacity, and the hosts suggested Korea should move quickly to pursue similar reforms.

The cosmetics sector had long been overlooked amid slowing overseas growth, but it is now rebounding on early signs of an export recovery combined with broader optimism around domestic-demand stocks. With first-quarter GDP turning positive and inbound tourism picking up, expectations for improved earnings are building across cosmetics alongside other domestic-demand names such as food and beverage, department stores, and discount marts. Rising exports to the U.S. and, despite some softness in the Middle East, diversification toward Europe were cited as further tailwinds. The hosts cautioned, however, that some stocks rallying off deeply depressed levels are moving on momentum rather than fundamentals, so careful stock selection remains important.

The second half of the broadcast featured an in-depth conversation on the K-defense industry with Kang Eun-ho, former head of Korea's Defense Acquisition Program Administration under the Moon Jae-in government and now a professor of advanced defense industry studies at Jeonbuk National University. The hosts opened by noting the discomfort of holding defense stocks and, in effect, hoping for news of conflict, acknowledging the negative view some hold of the industry. Kang pushed back, arguing that the fundamental purpose of weapons systems is to provide deterrence that prevents war and preserves peace — the military's top priority is deterring conflict, and the defense industry exists to support that deterrent capability.

Korea's defense competitiveness, he said, rests on price competitiveness, fast delivery, government-to-government trust, sustained technology investment, and weapons systems proven through training that mirrors real combat conditions. While major European defense suppliers sometimes fail to complete deliveries even five to seven years after signing a contract, Korea has completed three-year contracts in as little as two and a half years. The recent real-world performance of interceptor systems such as Cheongung, which responded instantly to unpredictable situations, was cited as further evidence of this competitiveness.

In Europe, despite the 'Buy European' push, many countries still lack the capacity to produce weapons systems across every domain on their own — France's strength lies in naval and air power, Germany's in land and submarine systems — leaving substantial room for domain-specific cooperation with Korea. In the Middle East, countries such as Saudi Arabia are working to build up their own defense capabilities, with procurement discussions underway across land, sea, and air. Even advanced economies, including Canada with its submarine program, have increasingly sought industrial cooperation with Korea.

On future defense technology, Kang noted that R&D spending has expanded under the current government, with active investment in physical AI, manned-unmanned teaming systems, and initiatives such as the 500,000-drone force plan. LIG Nex1 renamed itself Defense & Aerospace as it looks to extend its technology into space, while Hanwha Aerospace and Hyundai Rotem are pursuing next-generation tank and other new-technology development.

Defense company profitability differs between domestic procurement and overseas exports, he explained. Domestic orders are funded by the government budget and supplied at relatively thin margins, while export prices are set through negotiation and carry fatter margins. Operating profits only began rising meaningfully in earnest over the past three to four years — two to three years after exports first surged under the Moon Jae-in administration — a lag consistent with the time between contract signing and revenue recognition. With new technology development, current operating profit, and future order visibility all in place, he argued, the sector's valuations are on solid footing.

Korea's first-quarter GDP grew 1.7% quarter-on-quarter, its fastest pace in five and a half years, while the KOSPI trades near record highs. The hosts questioned, though, whether these improving macro figures are actually translating into better living standards for ordinary households, or whether the stock market's strength is simply making those who already hold assets wealthier — and reaffirmed their intent to focus on real changes in people's lives rather than headline numbers.

Next week brings a heavy slate of monetary-policy events. In Korean time, the U.S. Federal Reserve will announce its rate decision early Wednesday morning, and the European Central Bank will follow with its own decision Thursday evening. U.S. first-quarter GDP and the PCE price index are due Thursday night, and markets in Korea, China, Hong Kong, Taiwan, France, and Germany will all be closed on Friday.

Most central banks are expected to hold rates steady given the current high level of uncertainty. Japan wants to raise rates given its domestic economic conditions but has struggled to find the right timing amid rising oil prices; the U.S. decision, once expected to be effectively Chair Powell's last, now looks less certain in its framing; and Europe, scarred by its past bout with high inflation, also wants to hike but is still weighing when to act.

Next week is also heavy with earnings. LG Innotek, SKC, and ISC report, among others, with Wednesday particularly busy as Doosan Enerbility, Hyundai Engineering & Construction, and the Ecopro group of battery-material names all release results. Samsung Electronics reports confirmed segment-level earnings and future investment plans on Thursday, alongside Hanwha Aerospace, Naver, LG Energy Solution, Samsung Heavy Industries, and GS Engineering & Construction.

The KOSPI's steeper decline on the day owed more to external factors than domestic ones. U.S. futures fell nearly 1% as headlines about Iran-U.S. tensions swung repeatedly between reports of a deal and reports of a breakdown, unsettling markets broadly.

President Trump said there was no fixed deadline for ending the standoff with Iran and that his administration would continue its blockade stance, sending WTI crude to around 94 dollars a barrel. That in turn weighed not just on Korea but on Taiwan, Japan, and other major Asian markets, which fell in tandem.

The hosts advised investors to distinguish between declines driven by issues specific to the Korean market and those reflecting a global common factor. Watching international headlines, whether Asian markets are moving together, and external variables like oil, the dollar, and U.S. Treasury yields helps identify the actual cause of a selloff. Since the day's decline was broad-based rather than Korea-specific, they said, there was no need for outsized concern.

The government-level discussion around converting Korea's retirement pension system into a fund structure was flagged as a major potential catalyst for domestic equity flows. Even a partial inflow from the roughly 400 to 500 trillion won retirement pension pool could bring hundreds of trillions of won in fresh capital into the market, though further government discussion is still needed before the plan advances.

Taiwan's recent move to ease single-stock investment limits for equity funds and active ETFs — which is expected to boost inflows into large caps like TSMC — was cited as a case study, with the hosts suggesting Korea should pursue similar reforms without delay.

In defense, policy consistency was named as a core pillar of industrial competitiveness. The previous administration's cut to the defense R&D budget, framed at the time as dismantling an 'R&D cartel,' was noted as the only instance since Korea's founding of a government actually reducing the R&D budget outright; the current administration has not only restored those cuts but increased the budget further.

Government-to-government trust was also cited as a direct driver of export outcomes. Defense exports involve three parties — the R&D entities that hold the technology, the companies that manufacture it, and the foreign government that is the ultimate buyer — making trust between heads of state and between governments a decisive factor in closing deals. The prospect of a large follow-on contract for the locally produced K9 self-propelled howitzer in India was cited as one example, attributed in part to the warm relationship between President Lee Jae-myung and Prime Minister Modi.

Even with first-quarter GDP growth at 1.7%, its fastest pace in five and a half years, and the KOSPI near record highs, the host questioned whether these numbers actually signal something good. The underlying concern is whether ordinary households' lives are improving in step with the headline figures, or whether the strong stock market is simply making those who already own assets wealthier.

Going forward, the show said it would focus less on aggregate figures like GDP growth or index levels and more on how much difference these trends actually make in individual viewers' lives, and on building an investing environment that benefits the many rather than just the few. That, the host said, is what real economics and real investing look like — a note on which the show closed out its first week.