Individual Buys NAVER Shares Worth 670 Billion KRW at New Low This Month
Experts Say "Recession Concerns Negatively Affect Growth Stock Sentiment... Need to Confirm Earnings Improvement"
[Asia Economy Reporter Minji Lee] Despite concerns over high-intensity tightening and fears of an economic recession, individual investors are buying large amounts of stocks in companies whose share prices have significantly dropped. In some cases, stock prices have plunged to new 52-week lows, but since experts’ outlooks are not very optimistic, there is keen interest in whether ‘buying at low prices’ investments can succeed.
According to the Korea Exchange on the 7th, the stock most purchased by individual investors from the 1st of this month to the previous day was NAVER, with a net purchase of 675.8 billion KRW over three trading days. In the KOSPI market this month, individuals net bought only 64 billion KRW worth of stocks, but they concentrated heavily on NAVER with several hundred billion KRW.
As NAVER continuously hit new 52-week lows and fell more than 13% this month alone, investors started betting on a rebound. The stock price was dragged down by a ‘sell’ report from a foreign securities firm and news of the acquisition of ‘Poshmark,’ known as the U.S. version of Carrot Market. Reflecting concerns about the economic recession and interest rate hikes, Citi Global Markets Securities abruptly changed its investment opinion to ‘sell’ and lowered the target price by 50% to 170,000 KRW. Amid this, news that the company would invest around 2 trillion KRW was interpreted as negative.
Individuals also bought Kakao (73.4 billion KRW) the second most because it had also become much cheaper. Two months ago, it traded around 83,000 KRW, but due to negative investor sentiment toward growth stocks and the resulting decline in the value of its subsidiaries, the stock price plummeted more than 30%. The current price is around 54,000 KRW, near the 52-week low. Additionally, individuals bought Kia (54 billion KRW) and Hyundai Motor (21.7 billion KRW), which are inevitably hit by the U.S. Inflation Reduction Act (IRA). These stocks fell 13% and 11%, respectively, over the past month due to related issues.
However, whether the investments of individuals betting on low prices will succeed remains uncertain. In the case of NAVER and Kakao, even if interest rate hikes end by next year, concerns about earnings will inevitably increase if the global economy falls into a recession. Securities experts agree that while the valuations of the two companies have dropped to historic lows, they emphasize that low prices do not necessarily mean the stocks will rise. They collectively advise that rather than expecting a meaningful rebound this year, it is important to approach by monitoring the future earnings improvement trends in the commerce sector.
Jingu Kim, a researcher at Kiwoom Securities, analyzed, “NAVER’s acquisition of Poshmark, which is showing slowing growth and expanding operating losses, is a negative factor for profitability recovery,” adding, “We need to watch closely whether the company can expand its global market share centered on commerce through this deal.”
Donghwan Oh, a researcher at Samsung Securities, explained, “Kakao is defending profitability through cost management such as minimizing hiring and significantly reducing marketing related to webtoons, as advertising revenue growth is expected to slow in the second half of the year,” and added, “If the economic recession prolongs, there is a possibility of a slowdown in advertising and commerce revenue growth, as well as a decline in the value of subsidiaries.”
Although experts are not sending directly negative signals about Hyundai Motor and Kia, the market atmosphere is not favorable. The implementation of the IRA has already led to a significant decline in electric vehicle sales in the U.S. According to electric vehicle sales data compiled by Hyundai Motor and Kia’s U.S. sales subsidiaries last month, Hyundai’s dedicated electric vehicle Ioniq 5 sold 1,306 units in the past month, a 34% decrease compared to three months ago. Kia’s EV6 sold 1,440 units, down 16% from three months ago. Recently, at a National Assembly audit, Hyundai Motor CEO Young-woon Gong stated, “(Before the IRA law implementation) the existing subsidy amount (about 10 million KRW) was large, creating a significant barrier for customers to choose our cars,” and mentioned, “If we are not included in the IRA law’s exemption clauses or do not receive a grace period, significant damage is expected.”
Meanwhile, unlike individuals, foreign and institutional investors increased their weights mainly in the semiconductor and secondary battery sectors. Foreign investors bought Samsung Electronics and SK Hynix stocks worth 574.2 billion KRW and 304.1 billion KRW, respectively. The stock prices of these two companies rose 6% and 8% this month. It is analyzed that expectations for semiconductor industry improvement in the first half of next year and reports from global investment banks (IB) recommending an increase in the weighting of Korean semiconductor companies boosted investor sentiment. Institutional investors bought LG Energy Solution stocks worth 75 billion KRW and also acquired stocks of Korea Zinc (30.5 billion KRW) and EcoPro BM (16 billion KRW).
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