Foreigners' 'Palja' for 2 Consecutive Weeks... Net Selling Exceeds 2 Trillion Won

[Asia Economy Reporter Song Hwajeong] Foreign investors showed net selling in the domestic stock market for two consecutive weeks. The scale of sales increased significantly to the 2 trillion won range.

According to the Korea Exchange on the 28th, foreign investors net sold about 2.0354 trillion won in the domestic stock market during the week from the 22nd to the 26th. They sold 1.8436 trillion won in the KOSPI market and 191.9 billion won in the KOSDAQ market, respectively.

The stock most purchased by foreign investors last week was SK Biopharm. Foreign investors net bought SK Biopharm for 666.3 billion won last week. This was followed by HMM, which they bought for 116 billion won. In addition, they net purchased SK Telecom (70 billion won), Shinhan Financial Group (64.5 billion won), POSCO (46.4 billion won), Celltrion Healthcare (43.5 billion won), SK Hynix (35.4 billion won), Lotte Chemical (31.7 billion won), SKC (24.7 billion won), and Pearl Abyss (19.7 billion won).

The stock most sold by foreign investors last week was LG Chem. Foreign investors net sold LG Chem for 380.8 billion won last week. This was followed by Kakao, which they sold for 367.9 billion won. Other top foreign net sales included Samsung SDI (309.3 billion won), Samsung Electronics Preferred Shares (216.9 billion won), Samsung Electronics (157.5 billion won), Hyundai Motor (121.1 billion won), Kia Motors (115.4 billion won), Hyundai Glovis (96.7 billion won), NCSoft (72.1 billion won), and Celltrion (70.3 billion won).

Recent foreign capital outflows are analyzed to be due to the People's Bank of China's liquidity withdrawal. Soeun Ahn, a researcher at IBK Investment & Securities, said, "Since January, there has been a high correlation between foreign capital inflows and outflows in the domestic stock market and the net liquidity supply through the People's Bank of China's open market operations," adding, "During the period when the People's Bank of China withdrew funds around the Lunar New Year holiday, foreign capital sharply exited the domestic stock market." In the past, during China's tightening periods, foreign capital in the domestic stock market was not significantly affected as it is now, but as the proportion of domestic exports dependent on Chinese demand has increased, the downside risk to the domestic economy and corporate profits caused by China's demand contraction due to tightening policies has also grown.

There is an opinion that the liquidity withdrawal by the People's Bank of China will not reverse the upward trend. Researcher Ahn explained, "In the future, whether the People's Bank of China withdraws liquidity may increase volatility in the domestic stock market, but it is not expected to be a significant threat to break the upward trend," adding, "Even if the People's Bank of China continues to withdraw liquidity, the scale is likely not to be large."