Samsung Electronics Net Buy of 700 Billion Won This Month... Surpasses Total Net Buy in September
Strong Earnings Expected for LG Chem, SK Hynix, and Others Drive Purchases
Individuals Net Buy New Stocks Like Big Hit and Kakao Games
Big Hit Individual Investors Average 27% Loss... "Transition from Liquidity to Earnings Market in Progress"
[Asia Economy Reporter Minwoo Lee] While individual investors have been concentrating their purchases on newly listed stocks such as Kakao Games and Big Hit Entertainment (hereafter Big Hit), foreign investors have been buying large amounts of performance stocks like Samsung Electronics and LG Chem. This is interpreted as a judgment that the liquidity-driven market following the COVID-19 pandemic has reached a turning point toward a performance-driven market.
According to the Korea Exchange on the 19th, the stock most net purchased by foreign investors this month was Samsung Electronics. As of the 16th, they bought a total of 695.9 billion KRW, surpassing the previous month's net purchase amount of 558.9 billion KRW in just half a month. During the same period, LG Chem also net purchased 422.8 billion KRW, exceeding the entire previous month's net purchase of 398 billion KRW. Other stocks with large net purchases included SK Hynix (193.1 billion KRW), NAVER (187.5 billion KRW), and Kakao (164 billion KRW).
All of these companies reported strong third-quarter earnings. Samsung Electronics posted provisional results of 66 trillion KRW in sales and 12.3 trillion KRW in operating profit for Q3 this year. Sales were the highest ever, and operating profit significantly exceeded market expectations (consensus) of just over 10 trillion KRW. The quarterly operating profit surpassing 10 trillion KRW is the first time in about two years since Q4 2018 (10.8 trillion KRW). LG Chem also delivered a 'surprise performance,' recording provisional Q3 consolidated sales of 7.5073 trillion KRW and operating profit of 902.1 billion KRW, representing an 8.8% increase in sales and a 158.7% increase in operating profit compared to the same period last year. This is the highest quarterly performance ever. SK Hynix is also expected to report strong results. According to financial information provider FnGuide, SK Hynix is forecasted to have Q3 consolidated sales of 7.8594 trillion KRW and operating profit of 1.3036 trillion KRW, increases of 14.92% and 175.84% respectively compared to the same period last year.
On the other hand, individual investors' behavior was quite different. Newly listed stocks in the second half of the year such as Big Hit, Kakao Games, and SK Biopharm ranked high in net purchases. In particular, Big Hit ranked second with 403.8 billion KRW, more than 2.6 times the 154.9 billion KRW of Kakao Games, which ranked fourth. Despite existing entertainment agencies being unable to generate concert revenue due to COVID-19, Big Hit attracted attention by continuing to deliver surprise earnings through BTS, which is popular worldwide. However, since the first day of listing, the stock price has been on a downward trend after closing below the opening price. During this period, the average purchase price by individual investors was 263,076 KRW. Considering the stock price was 191,500 KRW as of 9:40 AM on that day, this means an average loss of about 27.2%.
Shin Seung-jin, a researcher at Samsung Securities, said, "Currently, we are in a transitional phase moving from a liquidity-driven market caused by COVID-19 to a performance-driven market," adding, "After the domestic stock market bottomed on March 19 and rebounded, expectations for growth stocks were too high. Now is the time to consider whether the gap between expectations for growth stocks and current stock prices has become excessive."
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