Foreigners See 'Sajase' for Two Consecutive Months... Concentrated in Semiconductors, Secondary Batteries, and Completed Cars

Domestic Stock Market Net Purchase of 4 Trillion Won in August
Focus on Beneficiary Stocks of the US Inflation Reduction Act

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Foreign investors, who have shown large-scale selling in the domestic stock market this month in a ‘Sell Korea’ trend, have been steadily buying over the past two months. These foreign investors mainly added secondary battery-related stocks, finished car manufacturers, and semiconductor stocks?expected to benefit from the Inflation Reduction Act (IRA)?to their portfolios.

On the 13th, Asia Economy reviewed the trading trends by investor type in the domestic stock market for July and August. Foreign investors purchased about 1.81 trillion KRW worth of stocks in the KOSPI, KOSDAQ, and KONEX markets in July. In August, their buying momentum strengthened further, with net purchases reaching approximately 4 trillion KRW. Foreign investors were the only group to show net buying in July and had the largest net purchase volume in August.

The stocks mainly bought by foreign investors were in the secondary battery, finished car, and semiconductor sectors. LG Energy Solution and Samsung SDI ranked first and second, respectively, among foreign investors’ net purchases last month. Within the top 20, six secondary battery-related stocks appeared, including LG Chem (7th), POSCO Chemical (12th), and SK Innovation (14th).

Finished car manufacturers were also among the stocks primarily acquired by foreign investors. Hyundai Motor ranked third in foreign investors’ net purchases, followed by Kia (9th) and Hyundai Mobis (8th) in the upper ranks. Semiconductor stocks such as SK Hynix (5th) and Samsung Electronics (11th) were also mainly purchased. In July, secondary battery, finished car, and semiconductor stocks also ranked high among foreign investors’ net purchases.

These stocks are expected to perform well in the domestic stock market this month as well, according to securities industry forecasts. Seungjin Shin, a researcher at Samsung Securities, said, “Sectors like automobiles, which have strong earnings momentum in the second half due to the strong dollar effect, or eco-friendly sectors (secondary batteries, solar power) clearly benefiting from the Inflation Reduction Act, will show favorable performance during the upcoming rebound phase.” Jaeman Lee, a researcher at Hana Securities, also analyzed, “It is time to adopt strategies that utilize the rebound of the U.S. Institute for Supply Management (ISM) manufacturing inventory cycle index, which has just started to move away from its worst levels. Sectors such as IT home appliances (secondary batteries), chemicals, IT hardware, construction, and hotel & leisure meet these conditions.”