Net Buying Trend Reverses After Mid-Month
Focused Purchases of Samsung SDI and SK Hynix
On the 27th, the real-time KOSPI is displayed on the electronic board in the dealing room of Hana Bank's headquarters in Jung-gu, Seoul. [Image source=Yonhap News]
[Asia Economy Reporter Minwoo Lee] Recently, foreign investors, who have been gradually increasing their buying activity, have primarily purchased shares of Samsung SDI and SK Hynix.
According to the Korea Exchange on the 27th, foreign investors continued net buying for six out of eight trading days from the 15th to the day before, except for two days. This marks a change from the consistent net selling observed until the 14th of this month. During this period, the net buying amounted to 289.6 billion KRW, which is less than the net selling amount of 2.8292 trillion KRW from the 1st to the 14th, but it indicates a shift away from the selling-dominant trend.
During this period, the stocks most purchased by foreign investors were Samsung SDI and SK Hynix, with purchases worth 273.2 billion KRW and 203.8 billion KRW respectively. This amount was more than twice that of the third-ranked net purchase stocks, KB Financial (121.4 billion KRW) and Kakao (107.9 billion KRW).
The stock prices of these companies also showed an upward trend. Samsung SDI’s closing price rose by 7.8% from the 14th to the day before, while SK Hynix increased by about 8.7%. These gains significantly outperformed the KOSPI’s 2.0% rise during the same period.
For Samsung SDI, the recent news of an agreement to establish a joint venture for electric vehicle secondary batteries with Stellantis, the third-largest automaker in the U.S., appears to have acted as a positive catalyst. Although the specific investment amount and production capacity of the joint venture factory have not been disclosed, it is expected that the investment will be in the trillion-KRW range.
Changmin Lee, a researcher at KB Securities, explained, "Samsung SDI currently supplies electric vehicle (EV) batteries to Jeep, a subsidiary of Stellantis, but unlike domestic competitors, it had no investment plans to establish a battery production plant in the U.S., which raised market doubts about its willingness to expand production capacity. However, with the establishment of this joint venture, mid- to long-term expansion of EV battery production capacity is expected, and a cylindrical battery joint factory with Rivian is also anticipated, indicating a positive trend due to expanded investment in North America."
SK Hynix’s strong performance expectations seem to have influenced its stock. The company announced the previous day that its consolidated sales for the third quarter of this year reached 11.8053 trillion KRW, with an operating profit of 4.1718 trillion KRW. These figures represent increases of 45.23% and 220.98%, respectively, compared to the same period last year. Additionally, the company’s announcement of a profitability-focused strategy rather than market share competition has been evaluated as reducing concerns about oversupply.
Sunhak Lee, a researcher at Hanwha Investment & Securities, said, "Although the memory downcycle has begun, SK Hynix is maintaining a profitability-focused strategy even if market share slightly declines, so large-scale inventory and price adjustments like in the past are unlikely. With limited supply growth, this downcycle is expected to conclude by the second quarter of next year."
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