Foreigners Net Sellers of Domestic Stocks for 3 Consecutive Weeks... Bought Value and Dividend Stocks

Foreigners Net Sold Over 1 Trillion Won Last Week
"Foreign Ownership Ratio Lowest Since Financial Crisis"

[Asia Economy Reporter Ji Yeon-jin] Foreign investors have sold domestic stocks for three consecutive weeks this month.

According to the Korea Exchange on the 25th, foreign investors recorded a net sale of 1.0251 trillion won in the domestic stock market from the 19th to the 23rd. They sold 459.4 billion won worth in the KOSPI market and 436.7 billion won in the KOSDAQ market. This marks a net sale of approximately 2.7751 trillion won over three consecutive weeks of selling dominance this month.

This selling trend by foreign investors is due to the U.S. Federal Reserve raising the benchmark interest rate by 75 basis points for the third consecutive time at the Federal Open Market Committee (FOMC) meeting held on the 22nd, accelerating the pace of tightening.

This high-intensity tightening in the U.S. last week pushed up government bond yields and caused the won-dollar exchange rate to break through the psychological resistance level of 1,400 won, fueling capital outflows.

The stock most heavily net sold by foreigners last week was Samsung Electronics, amounting to 472.2 billion won. This was followed by SK Hynix (-348.2 billion won), L&F (-133.2 billion won), Samsung Electronics Preferred (-79.3 billion won), and Korea Aerospace Industries (-49.9 billion won).

On the other hand, Samsung SDI was the most net bought with about 93.9 billion won, followed by KT&G (90.6 billion won), Hyundai Motor (82.3 billion won), Hanwha Aerospace (69.2 billion won), and SM Entertainment (64.3 billion won).

Seo Jeong-hoon, a researcher at Samsung Securities, said, "The foreign ownership ratio in the domestic stock market is already at its lowest level since the financial crisis," adding, "The won exchange rate is also in an overshooting state. Given the macro conditions, we need to prepare for a volatility phase at least until the end of the year, but contrarian investing has determined the success or failure of long-term investment."

Seo added, "From a short-term tactical perspective, attention should be paid to value stock factors that can overcome the high interest rate environment. Along with domestic automakers with high earnings expectations, sectors such as telecommunications and finance, which combine defensive capabilities and high dividend merits, can also be considered for portfolio inclusion."