Foreigners Turn Net Sellers in 3 Weeks... Samsung Electronics and SK Hynix 'Sell-off'

[Asia Economy Reporter Song Hwajeong] Foreign investors switched to net selling after three weeks. They also turned to 'selling' Samsung Electronics and SK Hynix, which had been continuously net bought until now.

According to the Korea Exchange on the 26th, foreign investors net sold about 467.3 billion KRW in the domestic stock market during the week from the 20th to the 23rd. They sold 355.5 billion KRW in the KOSPI market and 111.8 billion KRW in the KOSDAQ market.

The stock most bought by foreign investors last week was Samsung Biologics. Foreign investors net bought 80 billion KRW of Samsung Biologics last week. This was followed by Samsung SDI, which they bought for 32 billion KRW. Other net purchases included SK Telecom (28.8 billion KRW), Hyundai Motor (28.8 billion KRW), Samsung Electro-Mechanics (26.5 billion KRW), POSCO (24.9 billion KRW), Shinsegae (18.5 billion KRW), SKC Kolon PI (17.9 billion KRW), KT&G (16.8 billion KRW), and SFA Semiconductor (15.5 billion KRW).

The stock most sold by foreign investors last week was Samsung Electronics. Foreign investors net sold 199.4 billion KRW of Samsung Electronics last week. They also sold 84 billion KRW of Samsung Electronics Preferred shares. Other top net sales included SK Hynix (63.1 billion KRW), Amorepacific (62.2 billion KRW), SK Innovation (34.6 billion KRW), Shinhan Financial Group (26.1 billion KRW), Hotel Shilla (25.5 billion KRW), Celltrion Healthcare (24.4 billion KRW), Hyundai Mobis (23.5 billion KRW), and Kia Motors (19.8 billion KRW).

Since the Lunar New Year, the stock market is expected to rise moderately if the January Federal Open Market Committee (FOMC) meeting in the U.S. passes smoothly. Labor Gil, a researcher at NH Investment & Securities, said, "The KOSPI 12-month forward price-to-earnings ratio (PER) exceeds 11.8 times, facing pressure, but the KOSPI 12-month forward earnings per share (EPS) is bottoming out and gradually rebounding, and the S&P 500 relative PER is at the average level since 2010. If the January FOMC passes without issues, a moderate rise is expected due to corporate profit recovery and improved export growth rate in the first quarter."

Since the recent stock market rise has shown characteristics of a liquidity rally, changes in the liquidity supply environment by the U.S. Federal Reserve (Fed) are expected to be an important factor for the stock market. Researcher Noh said, "Market attention is focused more on liquidity supply policies such as intervention in the repurchase agreement (Repo) market and purchase of Treasury securities than on interest rate decisions. Even after the January FOMC, there is a high possibility of sensitive reactions to Repo market interventions and Treasury securities purchase policies." He also believes that IT's leadership will be maintained. Researcher Noh said, "For IT, the existing leading sector, passive funds such as ETFs and the market capitalization limit on Samsung Electronics may burden sentiment, but foreign investors are not subject to these regulations, and the expected selling volume is not large relative to market capitalization, so the existing leadership will be maintained."