Foreigners' Largest Sell-off This Year, Bought Bio Stocks and Earnings-Improving Stocks

Burden from Rapid Rise in Domestic Stock Market
Largest Net Selling This Year
Buying Bio and Earnings Improvement Stocks

[Asia Economy Reporter Song Hwajeong] Foreign investors, who showed the largest selling spree this year, were found to have net bought bio stocks and earnings-improving stocks.

According to the Korea Exchange on the 27th, foreign investors net sold 2.1799 trillion KRW in the domestic stock market the previous day. They sold 1.9848 trillion KRW in KOSPI and 209.2 billion KRW in KOSDAQ respectively. This scale of foreign selling is the largest this year.

Foreign investors, who actively bought in November last year, have been hesitant this year. It is interpreted that the burden from the rapid rise of the domestic stock market is the reason for foreign investors' hesitation. Seungji Jeon, a researcher at Samsung Futures, analyzed, "Global funds' flows have continuously moved into emerging market stocks since November last year, and inflows into Korea were concentrated in November last year but have slowed down since December. This seems to be due to price burdens and profit-taking focused on the sharply rising domestic stock market." Since October last year, KOSPI has risen about 35%, recording the highest increase among major countries' stock markets.

Despite this selling trend, foreign investors were found to have bought bio and earnings-improving stocks. On the previous day, SK Chemicals, Green Cross, and Samsung Biologics ranked first to third in foreign net buying. SK Chemicals' subsidiary, SK Bioscience, signed a contract in August last year with Novavax for contract manufacturing (CMO) of the COVID-19 vaccine and plans to import the technology from Novavax for domestic distribution and sales. Recently, it has also taken charge of domestic distribution of AstraZeneca, Janssen, and Pfizer vaccines. Green Cross is also gaining expectations for COVID-19 vaccine contract manufacturing. Minjeong Seon, a researcher at Hana Financial Investment, said, "Green Cross's COVID-19 vaccine contract manufacturing is a matter of timing of announcement," adding, "Once one contract signing is announced, news related to sequential contract signings for COVID-19 vaccine contract manufacturing may follow."

Samsung Biologics, the leading bio stock, is interpreted to have attracted foreign buying due to expectations of earnings improvement. The previous day, Samsung Biologics announced that its sales last year increased by 66% year-on-year to 1.1648 trillion KRW, and operating profit increased by 219.3% to 292.8 billion KRW. Samsung Biologics surpassed annual sales of 1 trillion KRW for the first time in its 9 years since establishment.

Although foreign investors are buying some stocks, it seems that more time is needed for them to turn to a buying spree. The researcher forecasted, "Although the outlook for the Korean stock market is not expected to be negative due to the semiconductor industry's favorable conditions, foreign investors are expected to respond passively for the time being amid the burden of high stock prices driven by individual investors."