Foreigners Reverse Position in 5 Weeks... Impact of Largest Sell-off on 30th Last Month

[Asia Economy Reporter Song Hwajeong] Foreign investors have turned to 'selling' in the domestic stock market for the first time in 5 weeks. On the 30th of last month, they dumped the largest volume ever, recording net sales on a weekly basis.

According to the Korea Exchange on the 6th, foreign investors net sold about 863.7 billion KRW in the domestic stock market during the week from the 30th of last month to the 4th of this month. They sold 872.3 billion KRW in the KOSPI market and bought 7.6 billion KRW in the KOSDAQ market. On the 30th of last month alone, foreign investors sold 2.4953 trillion KRW, marking the largest net sale ever. Despite net buying for 4 consecutive days afterward, the weekly total turned into a selling trend due to this impact.

The stock most bought by foreign investors last week was LG Chem. Foreign investors net purchased LG Chem worth 277.9 billion KRW last week. Next, they bought SK Hynix for 232.6 billion KRW. Other net purchases included Celltrion (167.1 billion KRW), SK Biopharm (105.9 billion KRW), Kakao (98.8 billion KRW), Naver (638 billion KRW), Shinpung Pharmaceutical (62.3 billion KRW), Hyundai Motor (52.9 billion KRW), Samsung Biologics (50.8 billion KRW), and Wonik IPS (43.9 billion KRW).

The stock most sold by foreign investors last week was Samsung Electronics. Foreign investors net sold Samsung Electronics worth 494.9 billion KRW last week. They also sold Samsung Electronics Preferred shares for 467.9 billion KRW. Other top net sales by foreign investors included Samsung SDI (94.4 billion KRW), KB Financial Group (72.7 billion KRW), SK Innovation (67.3 billion KRW), KT&G (61.6 billion KRW), BNK Financial Group (57.3 billion KRW), Com2uS (54.5 billion KRW), Samsung Fire & Marine Insurance (45.2 billion KRW), and Samsung C&T Corporation (40.6 billion KRW).

Regarding foreign investors' movements, attention should be paid to the December futures and options simultaneous expiration. Roh Donggil, a researcher at NH Investment & Securities, said, "The most important weekly event for the direction of the domestic stock market is the December futures and options simultaneous expiration." He added, "Since the September simultaneous expiration, foreign investors have net bought about 37,000 contracts of KOSPI 200 futures, and considering rollovers, the foreign investors' buying position is estimated to be around 60,000 contracts. Whether foreign investors roll over KOSPI 200 futures will provide an important clue for the short-term direction."

Researcher Roh said, "The period when foreign investors' net buying momentum in the spot market is strongest will be the first quarter of 2021. Before the simultaneous expiration, major investors may show a wait-and-see stance that hints at the direction of foreign investors' supply and demand." He added, "When major investors show a clear direction, it will be after the simultaneous expiration. Considering the foreign investors' net buying trend in the spot market and the possibility of net buying in the spot market to secure year-end dividend income for financial investments, a favorable environment for large-cap stocks is expected to continue."