The Industry Foreigners Bought with 5 Trillion Won: 'Secondary Batteries'

Foreigners Net Sell Over 5 Trillion Won in July
Sold 2.2 Trillion Won of Samsung Electronics Alone... Also Disposed SK Hynix, Hyundai Motor, etc.
Accumulating Secondary Batteries... LG Chem, SK IET, Samsung SDI Bought Continuously

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Foreign investors sold more than 5 trillion won in the KOSPI market last month alone. As the won-dollar exchange rate rose, funds have been continuously flowing out of the domestic stock market. This appears to be due to a stronger preference for safe assets amid the resurgence of COVID-19 and weak economic indicators from China. Nevertheless, the secondary battery sector has been steadily attracting attention by consistently buying since the latter part of last month.

According to the Korea Exchange on the 2nd, foreign investors net sold a total of 5.0762 trillion won in the KOSPI market last month. This is more than 50 times the net purchase of 111.7 billion won in the previous month. Of the total net sales of 20.8799 trillion won this year up to the previous trading day, one quarter was sold last month. The won-dollar exchange rate, which was in the 1,130 won range at the beginning of the month, surged to the 1,150 won range by the end of the month, indicating increased pressure for foreign net selling. Since the KOSPI ended its record-long eight-month consecutive rally last month, there are forecasts that attention should be paid to the future direction of foreign funds.

Foreign investors mainly disposed of the top market capitalization stocks in the KOSPI. The top net selling stock by foreigners last month was Samsung Electronics, with a total of 2.2862 trillion won sold. This was followed by SK Hynix (906.6 billion won) and Hyundai Motor (482.4 billion won). They mainly sold top market capitalization stocks in the semiconductor and automobile sectors.

On the other hand, the secondary battery sector ranked high in net purchases. LG Chem was the most bought, with 363.8 billion won. This was followed by SK IE Technology (SK IET) and Samsung SDI, with purchases of 283.7 billion won and 260.5 billion won respectively. LG Chem consistently net bought on all but five trading days last month. SK IET also bought almost every day except for four trading days.

The stock prices also showed an upward trend. As of the previous trading day, SK IET’s stock price rose 23.2% compared to the closing price on June 30. Samsung SDI also increased by 8.02% during this period. Only LG Chem fell slightly by 0.04%. Nevertheless, this performance was better than the KOSPI’s negative (-) 2.86% return during the same period. Kim Daejun, a researcher at Korea Investment & Securities, said, "The won-dollar exchange rate may remain high going forward, so the pressure for foreign net selling will not disappear," adding, "Since foreigners who lead the stock price direction take a selling position on the overall market but do not sell all sectors, following sectors that foreigners view positively can be one strategy."