Foreigners Increasing Purchases, Leading KOSPI Rise Following Individuals?

Foreigners Fire 'Return' Signal Flare
Net Daily Buying Exceeds 1 Trillion Won After Over Two Months... LG Chem Most Purchased

[Asia Economy Reporter Song Hwajeong] Foreign investors, who had been lukewarm about buying despite the KOSPI's strong performance, have recently expanded their purchase volume, drawing attention to whether they will play a leading role in the stock market alongside individual investors.

According to the Korea Exchange on the 11th, foreign investors net purchased 1.2323 trillion KRW in the KOSPI market last week. Compared to the previous two weeks when foreign investors' net purchases in the KOSPI were only 50.6 billion KRW and 3.2 billion KRW respectively, this is a significant increase. In particular, foreign investors net purchased 1.6478 trillion KRW in a single day on the 8th, signaling their return. The daily net purchase volume by foreign investors exceeding 1 trillion KRW occurred for the first time in over two months since November 5 last year.

After continuously selling following the COVID-19 outbreak last year, foreign investors switched to buying in November, leading the KOSPI to reach an all-time high, but showed a sluggish trend since December. While they actively bought in the KOSDAQ, their activity in the KOSPI remained minimal.

Recently, it appears that foreign capital began flowing in due to the Blue Wave, where the US Democratic Party controls the White House and both houses of Congress. Especially this year, foreign investors have purchased many eco-friendly related stocks among their top net purchases. Up to the 8th of this year, foreign investors net bought LG Chem the most at 364.6 billion KRW, followed by Hyundai Motor at 263.2 billion KRW. Other net purchases included Kakao (258.8 billion KRW), SK Hynix (248.3 billion KRW), Naver (162.7 billion KRW), Doosan Fuel Cell (147.7 billion KRW), Hana Financial Group (128.6 billion KRW), KB Financial Group (91.3 billion KRW), Samsung C&T (88.1 billion KRW), and Samsung Electro-Mechanics (83.1 billion KRW).

In the past week, Samsung Electronics was sold the most, but it is noteworthy that on the 8th alone, foreign investors bought Samsung Electronics worth 602.8 billion KRW. Generally, when foreign investors continue selling, they tend to sell a lot of Samsung Electronics, but when they start buying, they purchase a lot of Samsung Electronics. Therefore, the switch to buying Samsung Electronics can be interpreted as a general signal of foreign investors turning to buying in the domestic stock market. Supported by foreign investors' buying, Samsung Electronics touched 90,000 KRW intraday on the 8th.

The environment for foreign capital inflow is also favorable due to the Blue Wave. The US government's active stimulus measures are expected to weaken the dollar, and expectations for economic recovery have increased. Kim Younghwan, a researcher at NH Investment & Securities, said, "The expanded fiscal spending policy planned by the US Democratic Party under the Blue Wave will be implemented smoothly," adding, "The Biden administration's expansionary fiscal policy strongly promotes global economic recovery and causes a large amount of dollar liquidity to be released into the market. Both dollar weakness and economic recovery suggest that foreign capital will flow into the domestic stock market."