Samsung Electronics, SK Hynix [Photo=Yonhap News}

Money did not leave the market, but moved to different positions as headlines changed.

The key to the Korean stock market this week was not the rise and fall of the index, but the movement of money. Although the index repeatedly experienced sharp declines and rebounds, funds moved more frankly within it.

To summarize this week's fund flow in one sentence: Foreign investors sold first, institutions bought first, and money quickly moved between semiconductors and defense stocks.

On March 31st, the KOSPI plummeted by 4.3%, and foreign net selling in March recorded an all-time monthly high of 35.9 trillion won. On the same day, Samsung Electronics and SK Hynix also fell sharply by 5.2% and 7.6% respectively. The starting point of fund outflows was not the entire market, but semiconductors and large-cap stocks.

The first thing that caught attention was the departure of foreign investors.

In the late-month trading session this week, foreign investors were the ones who dragged down the direction of the Korean stock market. As the weak won and Middle Eastern risks combined, foreign investors first reduced their holdings in semiconductors and large-cap tech stocks.

This was difficult to attribute to simple profit-taking. In a period where currency instability and oil price shocks were simultaneously increasing, foreign funds were divested from the most liquid large-cap stocks first.

The primary reason the market faltered this week was not the magnitude of fear, but rather which stocks foreign funds exited first.

The next scene was the counterattack by institutions.

On April 1st, the KOSPI surged by 8.44% to 5478.70. However, this rebound was not led by foreign investors. Institutions net bought 4.03 trillion won, while foreign investors and retail investors net sold 612.6 billion won and 3.76 trillion won respectively.

Although Samsung Electronics and SK Hynix rebounded sharply that day, driving up the index, the nature of this rebound was closer to institutions recovering the fallen prices of large-cap stocks rather than a trend reversal due to the return of foreign investors. In other words, the starting point of this week's rebound was price restoration, not optimism.

However, the money did not stop there. On April 2nd, as concerns about a prolonged war resurfaced, the direction of funds immediately diverged.

Semiconductor and large-cap tech stocks, which had led the rebound the previous day, faltered again, and market attention shifted to defense, nuclear power, and some shipbuilding stocks.

This point is crucial. This week, funds did not move slowly from growth stocks to defensive stocks. Instead, as headlines tilted towards hawkishness, there was a clearer pattern of funds exiting semiconductors and making short-term refuges in stocks benefiting from war expectations.

Money was not contemplating "whether to leave the Korean stock market," but rather more rapidly calculating "where is the least volatile position right now."

In the latter half of the week, foreign investors belatedly returned.

On April 3rd, the KOSPI rebounded by 2.74% to 5377.30, with foreign investors and institutions net buying 814.6 billion won and 716.9 billion won respectively. In contrast, retail investors net sold 2.09 trillion won.

This rebound was not solely driven by semiconductors. Stocks related to shipbuilding, defense, and nuclear power, along with semiconductors, all rose. This trend indicates two things.

First, for the Korean stock market to gain momentum in its rebound, foreign investors must return.

Second, funds this week did not remain in a single sector for an extended period, but were preparing to return to large-cap stocks once the situation eased.

Ultimately, the nature of this week's fund flow can be summarized in three points.

First, foreign investors exited semiconductors and large-cap stocks first at the end of the month.

Second, institutions first absorbed semiconductors and large-cap tech stocks after the sharp decline.

Third, defense, nuclear power, and shipbuilding stocks acted as temporary shelters when war risks increased, and by the end of the week, foreign investors returned to semiconductors and large-cap stocks.

This was not a strong risk-on environment. Nor was it solely a fear-driven market where the entire market was collapsing. More accurately, the Korean stock market this week saw funds rotate in the following order: foreign investor outflow → institutional price recovery → short-term refuge in defense/nuclear power → belated return of foreign investors.

Money moved significantly, but not broadly. This week, funds moved not to where the stories were, but to where they were least volatile at the moment or could recover most quickly.

The checkpoints for next week are also clear.

First, whether the foreign net buying is a one-day reversal.

Second, whether the center of institutional buying remains in semiconductors or disperses to defense, nuclear power, and shipbuilding.

Third, whether retail funds continue to lean towards profit-taking in a rebounding market.

If these three points align in the same direction, the Korean stock market can broaden its sector rotation beyond a simple sharp decline and rebound. Conversely, if foreign investor returns weaken and the exchange rate falters again, this week's fund movements are likely to end as a short-term rotation.

In summary, money this week did not abandon the Korean stock market. Funds that exited semiconductors took refuge in defense and nuclear power, institutions bought first, and foreign investors eventually returned to large-cap stocks.

The essence of this week's fund flow was movement, not departure.