Foreigners, 'Palja' for 2 Consecutive Weeks... Buying NCSoft, Selling Samsung Electronics

[Asia Economy Reporter Song Hwajeong] Foreign investors continued their selling streak in the domestic stock market for two consecutive weeks.

According to the Korea Exchange on the 28th, foreign investors net sold approximately 1.5328 trillion KRW in the domestic stock market during the week from the 22nd to the 26th. They sold 1.2954 trillion KRW in the KOSPI market and 237.4 billion KRW in the KOSDAQ market.

The stock most purchased by foreign investors last week was NCSoft. Foreign investors net bought NCSoft shares worth 117 billion KRW last week. This was followed by SK Telecom, which they purchased for 113.5 billion KRW. Other net purchases included KB Financial Group (107.2 billion KRW), POSCO (854 billion KRW), Amorepacific (82.7 billion KRW), Korea Shipbuilding & Offshore Engineering (635 billion KRW), Shinhan Financial Group (41.6 billion KRW), Hyundai Steel (39.6 billion KRW), Ssangyong Cement (28.8 billion KRW), and Macquarie Infrastructure (26 billion KRW).

The stock most sold by foreign investors last week was Samsung Electronics. Foreign investors net sold Samsung Electronics shares worth 509.9 billion KRW last week. This was followed by NAVER, which they sold for 297.7 billion KRW. Other top net sales included LG Chem (276.3 billion KRW), Kia Motors (136 billion KRW), Kumho Petrochemical (100.5 billion KRW), Hyundai Mobis (96.5 billion KRW), Samsung Electronics Preferred Shares (82.6 billion KRW), SK Hynix (59.7 billion KRW), Hyundai Motor Company (59 billion KRW), and Pan Ocean (46.7 billion KRW).

The outlook for foreign investor demand is expected to gradually improve. Dami Kim, a researcher at Shinhan Financial Investment, said, "With solid fundamentals, easing valuation pressures, and a moderation in the pace of the dollar's strength, the foreign investor demand environment will gradually improve." Korea's earnings momentum remains at a favorable level compared to major countries. Based on the Morgan Stanley Capital International (MSCI) index, Korea's 12-month forward earnings per share (EPS) growth rate compared to the beginning of the year is 9.1%, which is comparable to or higher than emerging markets as well as the US and UK, where vaccination progress has significantly advanced and economic reopening expectations are high. Although Korea's stock market saw a sharp rise in the price-to-earnings ratio (PER) in the short term despite solid earnings improvements earlier this year, the 12-month forward PER fell by 13.1% from its peak this year due to the market correction in March, easing valuation pressures. Shinhan Financial Investment expects that psychological factors such as concerns over monetary policy normalization and government bond supply and demand will be partially resolved, and with a reduction in economic differentiation between the US and non-US markets, a cyclical dollar weakening is anticipated in the second quarter, which will also ease exchange rate pressures. Researcher Kim said, "As economic normalization continues to improve fundamentals and relative valuation and the pace of dollar appreciation are moderated, the foreign selling trend will gradually slow down."