Foreigners, 5 Consecutive Weeks of 'Palja'... LG Chem Accident, Selling Samsung Electronics

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

According to the Korea Exchange on the 11th, foreign investors net sold about 1.7881 trillion KRW in the domestic stock market during the week from the 5th to the 9th. They sold 1.9556 trillion KRW in the KOSPI market but purchased 167.6 billion KRW in the KOSDAQ market.

The stock most purchased by foreign investors last week was LG Chem. Foreign investors net bought LG Chem for 140.9 billion KRW last week. This was followed by Samsung SDI with a net purchase of 97.9 billion KRW. Other net purchases included SK Innovation (91.2 billion KRW), SK IE Technology (76.6 billion KRW), Kakao (73.9 billion KRW), SK Telecom (70.7 billion KRW), POSCO Chemical (56.1 billion KRW), Doosan Heavy Industries & Construction (50.1 billion KRW), EcoPro BM (43.7 billion KRW), and Kakao Games (43.3 billion KRW).

The stock most sold by foreign investors last week was Samsung Electronics. Foreign investors net sold Samsung Electronics for 505 billion KRW last week. They also sold Samsung Electronics Preferred shares for 236.2 billion KRW. Other top net sales included Hyundai Motor (216.6 billion KRW), SK Hynix (206.9 billion KRW), KB Financial Group (152 billion KRW), Kia (114.1 billion KRW), Naver (526 billion KRW), KT&G (49.9 billion KRW), HYBE (47.4 billion KRW), and Seegene (44.8 billion KRW).

Amid the market correction caused by the fourth wave of COVID-19, it is expected that this correction will mark the end of selling by pension funds and foreign investors. KB Securities researcher Hainhwan said, "The upper target for the National Pension Service's domestic stock holdings this year is 19.8%, but due to large-scale selling, it dropped to 20.1% as of April." He added, "Considering that pension funds net sold more than 1 trillion KRW in the KOSPI from May to July and the recent decrease in stock valuation due to the correction, it is highly likely that mechanical net selling will end with this correction." The selling pressure from foreign investors is also expected to subside, with selling likely to stop first in the KOSDAQ market. Researcher Hainhwan explained, "Referring to the 2013 taper tantrum case, foreign investors switched to net buying after the tapering (asset purchase reduction) issue passed." He continued, "Similarly, after the tapering issue passes this time, foreign investors are likely to begin actively buying emerging market stocks." He added, "I believe that non-arbitrage program selling will end first in the KOSDAQ. Looking at cumulative non-arbitrage net buying since 2003, the KOSDAQ has about 1% remaining relative to free float market capitalization, while the KOSPI has 3.1% remaining, meaning that the remaining volume available for additional selling is much smaller in the KOSDAQ than in the KOSPI."