[Foreign Investment Trends] 3 Trillion Won Net Purchase This Month... Exchange Rate Plunge Extends 'Buy Korea'

[Asia Economy Reporter Ji Yeon-jin] Foreign investors have purchased nearly 3 trillion won worth of domestic stocks this month. Following Chinese President Xi Jinping's declaration of long-term rule and the reflection of expectations for a peak-out in global inflation, foreign investors' 'Buy Korea' trend is expected to continue for the time being.

According to the Korea Exchange on the 13th, foreign investors net bought domestic stocks worth 1.7111 trillion won from the 7th to the 11th. They net purchased about 1.4051 trillion won in the KOSPI market and bought 306 billion won worth in KOSDAQ. Foreign investors, who switched to buying since last month, have recorded six consecutive weeks of net buying, purchasing about 2.9271 trillion won worth just this month.

The stock most purchased by foreign investors last week was LG Energy Solution, with net buying worth 206.7 billion won. This was followed by Samsung Electronics (193.7 billion won), SK Hynix (174.4 billion won), Samsung SDI (155.3 billion won), and Samsung Electro-Mechanics (114.5 billion won).

On the other hand, POSCO Holdings was the most sold stock with net sales of 158.6 billion won. NAVER (-145.2 billion won), Kia (-70.7 billion won), S-Oil (-48.1 billion won), and Amorepacific (-35.5 billion won) were also heavily net sold.

Analysts attribute the foreign buying trend to expectations of inflation peaking out, as the US Consumer Price Index (CPI) for August and September exceeded market expectations and slightly eased last month.

Seojung-hoon, a researcher at Samsung Securities, said, "It is reasonable to expect that foreign demand continuing in Korea from the end of September will be extended further," adding, "The sharply falling won exchange rate since last week is expected to serve as evidence of foreign demand so far and as a driving force going forward."

He continued, "Since this is a process of quickly reversing the foreign selling trend that has continued since last year, it is natural that the subsequent developments will proceed in reverse order," and predicted, "Technical rebounds of high-multiple stocks sensitive to interest rates among sectors that have undergone significant price adjustments are quite foreseeable, and because the foreign investors' demand vacuum effect on these stocks is not insignificant, there is considerable potential for price reactions."