An electronic board set up in a dealing room of Hana Bank shows a slight recovery of the benchmark KOSPI shortly after the opening of the market on Tuesday. Yonhap

By Lee Min-hyung

Foreign investors have returned to a selling spree of Korean shares for the first 12 days of December amid unceasing fears of the U.S. Federal Reserve's monetary tightening.

This is in contrast to their recent buying of local shares over the past two months, which raised hopes the benchmark KOSPI regaining momentum for a rally in lockstep with the final cycle of rate hikes.

But after they shifted their position this month, the main bourse has failed to pick up momentum and fell below the 2,400-point mark after recovering to more than 2,500 early in December.

According to data from the Korea Exchange, foreign investors sold Korean shares worth 1.27 trillion won between Dec. 1 and 12. The KOSPI also fell by around 4 percent during the same period.

Large-cap semiconductor and tech stocks placed their names on the top-selling list by foreigners. SK hynix topped the list with foreign investors selling shares worth 397.6 billion won. Samsung Electronics came in second after they dumped 303.4 billion won worth of shares. LG Innotek and Krafton followed the list. Last week, the exchange operator designated LG Energy Solution as an overheated short-selling stock after the portion of its short-selling reached more than 34 percent out of all of its sales transactions.

Market analysts said chances remain slim for the local stock market to achieve any noteworthy rebound from a near-term viewpoint.

"Now is the time for investors to look out for the possibility of the main bourse widening its downfall, as expectations of the Fed's possible rate cut of 50 basis points sometime in the latter half of next year will not grow further," Daishin Securities analyst Lee Kyoung-min said, adding that foreign investors may prefer to take profits by selling Korean stocks during this period of monetary and financial uncertainty.

"The main bourse is moving in a boxed range of 2,400 and 2,500 points, but its upward momentum is gradually losing steam," he said. He advised investors not to rely on their confirmation bias of looking only for positive news, but to face reality.

The Fed's two-day-long Federal Open Market Committee (FOMC) meeting is expected to determine whether Korean shares will achieve a year-end Santa Claus rally or not. The market consensus is that the Fed will push for an additional big rate hike of increasing its key rate by 50 basis points during the upcoming meeting that will begin on Dec. 13.