Institutions Bet on Samsung Group Stocks Even After Selling Everything Else

Focused Buying Excluding Electronics Despite Profit-Taking

[Asia Economy Reporter Minji Lee] As the KOSPI reached its highest point of the year, institutions that had realized profits instead focused on buying Samsung Group stocks excluding Samsung Electronics.

According to the Korea Exchange on the 20th, from the 16th of this month until the day before, institutions sold a total of 1.09 trillion won worth of stocks in the KOSPI market. This contrasts with foreigners, who bought 993.1 billion won worth of stocks during the same period, maintaining a net buying trend for 11 consecutive trading days.

[Image source=Yonhap News]

This is because institutions anticipated an index adjustment due to short-term overheating. Yesin Lee, a researcher at Shinhan Financial Investment, said, "Capital concentration and short-term overheating will show a temporary lull until policy momentum is reconfirmed," adding, "In June, August, and September, the index showed a similar pattern of overheating followed by a decline."

Despite this, institutions are betting on the rise of Samsung Group stocks. Excluding exchange-traded funds (ETFs), among the stocks institutions bought this week, Samsung Biologics led with 39.9 billion won, followed by Samsung Life Insurance with 38 billion won. Other top net purchase stocks included Samsung Fire & Marine Insurance (30.7 billion won), Samsung Engineering (12.7 billion won), and Samsung Securities (12.5 billion won).

Expectations for Samsung Biologics' external growth next year have increased. Sales growth is anticipated due to the full-scale increase in the operating rate of Plant 3 and strategic orders for Plant 4. The operating rate of Plant 3 at the end of next year is estimated to be 51%, up 20 percentage points from this year. When the stock price fell about 19% from the intraday high to 698,000 won earlier this month, institutions began net buying 185,703 shares from that day. Supported by this, Samsung Biologics closed at 808,000 won yesterday.

Samsung Life Insurance is expected to improve its performance in the fourth quarter due to improved loss ratios following a third-quarter earnings surprise. Doha Kim, a researcher at Cape Investment & Securities, diagnosed, "Despite the trend of increasing dividend payout ratios, the current stock price level, which does not reflect the value of Samsung Electronics shares held, is undervalued." Samsung Fire & Marine Insurance is expected to expand insurance profits due to further improvement in loss ratios and stabilization of the business ratio. Since the beginning of this month, institutions have acquired 759,142 shares of Samsung Life Insurance and 296,032 shares of Samsung Fire & Marine Insurance, respectively.

On the other hand, institutions maintained a net selling trend for Samsung Electronics. The shares sold by institutions from the 16th to the day before reached 2.79 million shares.