Foreigners Who Swept Up 7 Trillion Won in November Achieved a 20% Return

Samsung, LG Electronics, SK Hynix Among Top 10 Net Buyers This Month with Average 20.14%
Additional Upside Potential, Continued Buying Expected
RCEP Benefits Anticipated, Focus on Related Stocks

[Asia Economy Reporter Song Hwajeong] Foreign investors, who led the KOSPI to a record high by purchasing more than 7 trillion won in November, have also posted substantial returns. The average return on the top 10 net purchased stocks reached 20%.

According to the Korea Exchange on the 30th, foreign investors net purchased 7.43 trillion won in the KOSPI from the beginning of this month until the 27th. The stock most bought by foreigners was Samsung Electronics, followed by LG Electronics, SK Hynix, Samsung SDI, Kakao, Amorepacific, Doosan Heavy Industries & Construction, SK Chemicals, Hyundai Mobis, and Samsung Electro-Mechanics, making up the top 10 net purchased stocks. The average return of these stocks was 20.14%, significantly outperforming the KOSPI’s 14.49% increase during the same period.

The stock with the highest gain among them was LG Chem, which rose more than 30% compared to early this month. Additionally, SK Hynix, Samsung SDI, Doosan Heavy Industries & Construction, and SK Chemicals also increased by more than 20%, and Samsung Electronics rose 18.82%, with all top 10 net purchased stocks by foreigners recording positive returns.

As foreign investors continue their net buying streak and achieve high returns, there is a growing opinion that attention should be paid to the stocks they are net purchasing. Kim Jungwon, a researcher at Hyundai Motor Securities, said, "Since foreign investors have switched to net buying and expanded their purchase scale since November, it is necessary to pay attention to sectors with foreign net buying." He analyzed, "Looking at the stock returns of sectors with foreign net buying over the past month, the chemical, shipbuilding, IT home appliances, energy, automobile, and semiconductor sectors show large net purchase volumes relative to market capitalization and also high stock returns."

There is also interest in whether the foreign buying momentum will continue. Since the KOSPI, when converted to dollars, is still below its previous peak, there is an analysis that further gains are possible. Researcher Kim said, "Based on the dollar-converted KOSPI, it is still 4.2% below the previous peak," adding, "From the foreign investors’ perspective based on the dollar-converted KOSPI, there is room for additional KOSPI gains up to the previous peak."

It is expected that there will be no sudden outflow of foreign funds because the recent inflow is directed toward Korea rather than emerging markets as a whole. Ha Inhwan, a researcher at KB Securities, explained, "Since mid-November, the nature of foreign buying has changed, with inflows expected to benefit Korea following the final agreement on the Regional Comprehensive Economic Partnership (RCEP)." He added, "If the funds are flowing only into the Korean stock market rather than emerging markets in general, the Korean won may show a stronger trend compared to other emerging market currencies (such as the yuan), and even if the dollar strengthens, the supply-demand impact may be less than in other emerging markets, so the possibility of a sudden outflow of currently inflowing foreign funds is low."

There is also an opinion that, since recent foreign funds have a strong inflow character expecting the economic effects of RCEP, attention should be paid to sectors expected to benefit from RCEP’s economic effects. Researcher Ha said, "We need to broaden the expectation of benefits to sectors expected to gain from RCEP’s economic effects," adding, "Besides semiconductors, sectors expected to benefit from RCEP’s economic effects include electrical and electronics (IT hardware, IT home appliances, display), automobiles, steel, petrochemicals, and machinery."