Expectations for Economic Recovery in China... Foreigners Net Buy 1.7 Trillion Won Over the Past Four Days

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Foreign investors, who have been continuing 'Sell Korea' this year, started to massively buy domestic stocks from the end of last month.

According to the Korea Exchange on the 1st, foreign investors net purchased 1.7275 trillion KRW in the KOSPI market over four trading days from the 26th to the 31st of last month. In particular, they net purchased about 1 trillion KRW in a single day on the 31st of last month.

From June 1st, ahead of the MSCI rebalancing, passive fund money tracking the index poured in 500 billion KRW at the previous day's market close, increasing the scale of purchases.

With this large-scale buying, foreign investors also net purchased 130.6 billion KRW on a monthly basis last month, successfully switching to a net buying position for the first time since December last year. Foreign investors had contributed to dragging down the domestic stock market by net selling more than 12 trillion KRW in the KOSPI market until the 25th of last month this year.

Last month, foreign investors bought automobile, secondary battery, and financial stocks such as Kia (397 billion KRW), LG Energy Solution (288 billion KRW), Woori Financial Group (198 billion KRW), Hwasung (164 billion KRW), and KB Financial Group (154 billion KRW).

During the same period, individual investors net sold 1.0062 trillion KRW, switching to a net selling position for the first time this year. Individual investors had continued 'bottom buying' by purchasing 18.5 trillion KRW in the KOSPI market until the 25th of last month this year, but with the recent index rebound, they appear to have realized short-term gains. Individuals mainly sold HMM[011200] (-426 billion KRW), LG Energy Solution (-348 billion KRW), and Kia (-38 billion KRW).

The market views that with the US interest rate hikes and other tightening already reflected in the stock market, and the Chinese economic slowdown hitting the bottom, the environment for foreign investors to return to the domestic stock market has been prepared. The recent decline in the exchange rate also seems to positively affect foreign buying momentum. Seo Jeong-hoon, Senior Research Fellow at Samsung Securities, said, "The recent foreign investment ratio had almost reached a historically low level," adding, "With the easing of the Shanghai lockdown measures in China and growing tolerance to US tightening issues, foreign capital is flowing in."