[King Dollar's Bombardment] Which Stock Did Foreigners Buy Every Single Day Despite the Strong Dollar?

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] As the exchange rate hits its highest level since the financial crisis, foreign investors are showing signs of withdrawing from the domestic stock market. However, there are stocks that foreign investors have purchased despite the 'King Dollar' phenomenon, drawing attention. These are mainly in the automobile and secondary battery sectors, which have a high export ratio to the U.S., and among them, the stocks with bright third-quarter earnings prospects.

According to the Korea Exchange on the 6th, from August 31, when the won-dollar exchange rate set new highs for five consecutive trading days, through September 5-6, the stocks that foreign investors consistently bought were in the automobile, secondary battery, chemical, and solar power sectors. In particular, on the 5th, when the exchange rate surpassed 1,370 won for the first time in 13 years and 5 months since April 2009, Hyundai Motor was the most purchased stock by foreign investors. Foreign investors bought Hyundai Motor every day from August 31 to September 6, purchasing 28.336 billion won on the 31st, 13.04 billion won on the 1st, 19.377 billion won on the 2nd, and 36.516 billion won on the 5th. Considering that foreign investors net sold 69.3 billion won in the KOSPI market on that day, this scale of net buying is considered significant. On the 6th, they also net bought 10.591 billion won, totaling 97.824 billion won over five consecutive trading days of rising exchange rates.

During this period, the won-dollar exchange rate set new daily highs. On August 31, the exchange rate closed at 1,337.60 won, even surpassing 1,352 won intraday. It then closed at 1,352.9 won on September 1, 1,362.6 won on the 2nd, 1,371.4 won on the 5th, and 1,371.7 won on the 6th, marking five consecutive trading days of record highs. The closing price on the 6th was the highest level in 13 years and 5 months since April 1, 2009 (1,379.5 won) during the financial crisis.

Additionally, LG Chem and Hanwha Solutions were purchased for 57.24 billion won and 75.259 billion won respectively over four trading days. Kia, Samsung SDI, and LG Energy Solution were also bought for 69.913 billion won, 46.634 billion won, and 111.258 billion won respectively during this period.

The stocks that foreign investors steadily bought despite the 'King Exchange Rate' share the common traits of having a high export ratio to the U.S., benefiting from the rising exchange rate, and having bright third-quarter earnings prospects. According to the Ministry of Trade, Industry and Energy's 'August 2022 Export-Import Trends,' exports of 15 major items, including automobiles, secondary batteries, and steel, recorded the highest August figures ever. Among them, secondary battery exports were the highest ever. Compared to a year ago, automobile exports increased by 35.9%, and secondary battery exports by 35.7%. The third-quarter outlook is also positive. Yoo Ji-woong, a researcher at Daol Investment & Securities, said, "The third quarter is traditionally an off-season, and the number of operating days at domestic automobile factories is decreasing, but with the supply chain recovery trend, Hyundai Motor is expected to increase by 13% and Kia by 20% compared to the same period last year." He added, "In the fourth quarter, volume rebound will fully materialize, leading to strong profit momentum."

Shin Jung-ho, a researcher at Ebest Investment & Securities, explained, "While a rising exchange rate can reduce the upward momentum of the domestic stock market, it can be a positive factor for companies with a high export ratio to the U.S."