KRX CEO Addresses Stock Market Decline

On January 16, 2026, Jeong Eun-bo, CEO of Korea Exchange (KRX), spoke with CNBC, asserting that the recent decline in South Korean stocks isn’t due to waning confidence from foreign investors.

Jung noted that a portfolio rebalance among international investors was to be expected after the Korean market experienced significant growth in 2025 and early 2026. The Kospi index had surged by 76% in the previous year and was up 108.85% at the start of June before its recent drop, indicating a substantial increase in the country’s presence in various global portfolios.

“Generally, foreign institutional investors have set portfolio allocation targets. Consequently, rebalancing is necessary, leading to sales of Korean stocks,” Jung explained.

The Kospi reached its highest point on June 2 but has since plummeted over 13% in just six trading days.

Jung reassured that the ongoing rebalancing process among major foreign institutions is likely nearing completion. He remarked during discussions with foreign investors that the overall market situation is being misinterpreted as a loss of confidence.

As per KRX data, foreign investors sold around 1.24 trillion won (about $801 million) as of Singapore’s 11 a.m. on June 5. On that day, the Kospi experienced an 8% drop, prompting a circuit breaker to be activated. Goldman Sachs analysts indicated that net outflows from the Kospi totaled roughly $62 billion by the end of May.

The selling pressure abroad has also impacted the Korean won, which fell to 1,561.5 won per dollar on June 5, marking the lowest point in 17 years.

Jung pointed out that the won tends to be sensitive to capital outflows, as it is categorized as a “regional currency” rather than a global reserve. However, he mentioned that the authorities are actively managing the situation. He anticipated that as the rebalancing moves toward completion, the pressures on the forex market would diminish and stabilize.

Korean Market Volatility

Jung highlighted that volatility has heightened due to ongoing conflicts in the Middle East, South Korea’s heavy reliance on external factors, and the typical instability of the semiconductor sector, which largely drives the Seoul market.

The Kospi is heavily influenced by Samsung and SK Hynix, two major companies in the semiconductor space, together responsible for 45% of the index. Jung remarked that this sector inherently possesses “cyclical characteristics that enhance volatility.”

The semiconductor field often experiences cycles of boom and bust stemming from supply-demand mismatches, with production capabilities taking considerable time to establish, in contrast to the volatile demand that can shift quickly due to tech advancements.

He also reassured investors about the attention being given to potential adjustments in market regulations, noting that the major banks have revised their projections for the Kospi upwards. For example, Goldman Sachs recently raised their 12-month target for the index to 12,000, up from an earlier estimate of 9,000.

“The recognition of South Korea’s strong growth potential on an international level boosts our confidence that there’s still much room for upside,” Jung concluded.