Foreign Investors Target Stock Korea Amid Market Slump
US Financial Firms Expand Stakes by Exploiting Supply Gaps
[Asia Economy Reporter Junho Hwang] Amid the continued plunge in the Korean stock market caused by the 'exodus' of foreign investors and the resulting supply-demand gap, some major foreign players have started buying at low prices. It appears they are attempting to realize the long-standing securities market adage of 'buy at the knee, sell at the shoulder' through contrarian investing, but whether the stock prices will meet their expectations remains uncertain.
Miricapital Increases Stake by 1% in One Month
Choi Eun-young, Chairperson of Yusu Holdings
According to the Financial Supervisory Service's electronic disclosure system on the 4th, Miricapital Management, an asset management firm based in Boston, USA, purchased 10,400 shares of Yusu Holdings on August 22, and subsequently acquired an additional 275,500 shares (1.05%) by the 26th of last month. Through 18 on-market purchases over the course of this month, Miricapital's stake in Yusu Holdings surged to 6.08%.
Miricapital stated that its investment purpose is 'simple investment.' Typically, holding more than 3% of shares allows one to propose auditor appointments and other actions, but given Yusu Holdings' governance structure, this is a relatively small stake to participate broadly in management. The largest shareholder of Yusu Holdings is Choi Eun-young, the widow of the late Cho Su-ho, former chairman of Hanjin Shipping, holding 18.11% of shares. Her two daughters, Cho Yu-kyung (9.52%) and Cho Yu-hong (9.52%), along with the Yang Hye Foundation (9.90%), are major shareholders, with Chairman Choi's friendly shares totaling approximately 47.05%.
Yusu Holdings was established when Chairman Choi separated from the Hanjin Group, primarily operating forwarding services for international cargo transport and contract logistics including warehousing and transportation. In the first quarter, not only the holding company but also key affiliates such as Cyberlogitec and Yusu Logistics all returned to profitability. In March last year, following suggestions from activist shareholders, the dividend was increased to 500 won.
What Did Morgan Stanley See in AhnLab?
Ahn Cheol-soo, a member of the People Power Party, is attending the discussion forum "Overcoming Crisis to the Future, Civil-Military-Political Discussion Forum: Directions for Pension Reform for the Youth Generation" held at the National Assembly on the 9th. (The content of the photo is unrelated to the article) / Photo by Yoon Dong-joo doso7@
Morgan Stanley, a US investment bank, has taken a position in AhnLab, acquiring 497,324 shares (4.97%). This appears to be partly from shares disposed of by the US firm First Trust Advisor, which sold its entire 14.96% stake.
First Trust had accumulated 14.12% (KRW 149.7 billion) of AhnLab shares between March at prices ranging from KRW 101,181 to 172,588 per share, becoming the second-largest shareholder. This was during the period when Ahn Cheol-soo, founder of AhnLab and a member of the People Power Party, was being considered as the first prime minister under the current government. On March 24, AhnLab's stock price soared to KRW 218,500 amid strong expectations of Ahn's nomination. If appointed prime minister, he would have to place stocks worth over KRW 30 million in a blind trust. The anticipation of a new largest shareholder drove the stock price up. However, Ahn was not nominated, and First Trust abandoned its expectations and sold all its holdings.
Morgan Stanley purchased these shares at prices between KRW 62,898 and 67,666, but it is unknown what strategy or outlook led them to acquire AhnLab shares.
The Capital Group Becomes Third Largest Shareholder of SK Hynix
The Capital Group, one of the four largest US asset managers with net assets of USD 3 trillion, secured a 5.05% stake in SK Hynix as of August 29. As of June 30, only SK Square and the National Pension Service held more than 5%, making The Capital Group the third-largest shareholder of SK Hynix.
However, SK Hynix's stock price continues to hit new yearly lows. On the 29th, it dropped to KRW 80,800, approaching the '70,000 Nix' level. Currently, it records a negative return of -12.52%. Approximately KRW 11.7 billion vanished in less than a month.
Interestingly, this is not the first time The Capital Group has purchased a large stake in SK Hynix and recorded negative returns. In August 2018, they also poured funds through multiple funds in a single day on the 29th, acquiring shares at prices of KRW 82,385 and KRW 82,700. As the stock price declined, they increased their holdings to 7.8% at prices between KRW 57,690 and KRW 77,500. This was a form of dollar-cost averaging to respond to the bear market. They only managed to sell shares above KRW 80,000 on October 18, 2019, after reducing their holdings to 4.54% by selling 1% to clubs.
Financial investment industry analysts interpret these foreign investors' Korean stock purchases as a long-term investment strategy aimed at capitalizing on the supply-demand gap. According to the Korea Exchange, foreign investors sold domestic stocks worth KRW 3.135 trillion over the past month.
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