Same Semiconductor Stocks?…Foreigners Buy Samjeon and Sell Hynix

Samsung Electronics Tops Foreign Net Purchases in March
Target Price Raised Despite Q1 Loss Forecast
Hynix's Loss Expected to Widen More Than Anticipated

Since the beginning of this month, foreigners have been continuing their 'Sell Korea' trend. The global financial instability triggered by the Silicon Valley Bank (SVB) crisis, strengthened preference for safe assets, and earnings shocks of domestic companies are interpreted as factors that have frozen foreign investors' sentiment. In particular, even within the same semiconductor stocks, foreigners are buying Samsung Electronics while selling SK Hynix, drawing attention to the background behind this behavior.

According to the Korea Exchange on the 29th, foreigners sold a total of 1.742 trillion won worth of stocks in the domestic market from the 1st to the 28th of this month. This is a complete reversal from January and February, when foreigners led the rise of the Korean stock market by net buying 6.5025 trillion won and 1.0594 trillion won, respectively.

In March, foreign investors' sentiment has frozen. The crisis spreading to SVB, Credit Suisse (CS), and Deutsche Bank, dubbed the 'Bankdemic (Bank + Pandemic),' has strengthened the preference for safe assets like gold. On the 28th, the April futures price of international gold closed at $1,973.50 per troy ounce on the New York Mercantile Exchange. This represents about a 7% increase since the beginning of the year. Last week, the price even surpassed $2,000 intraday. Additionally, the first-quarter earnings shock of domestic companies has accelerated foreign capital outflows. In the key semiconductor industry, both Samsung Electronics and SK Hynix have forecasted first-quarter losses. The securities industry expects Samsung Electronics' semiconductor division to record a loss exceeding 3 trillion won, and SK Hynix to post a loss exceeding 4 trillion won. This marks Samsung Electronics' first quarterly loss since Q1 2009, and SK Hynix's loss is larger than initially expected.

Although both Samsung Electronics and SK Hynix have forecasted losses, foreigners have been net buyers of Samsung Electronics while net sellers of SK Hynix, attracting interest in the reasons behind this. According to the Korea Exchange, foreigners net bought 879.8 billion won worth of Samsung Electronics shares from the beginning of this month to the 28th, ranking first in net purchases. This is about four times the net purchase volume of Samsung SDI (224.1 billion won), which ranks second.

SK Hynix was sold off by foreigners by 582 billion won, ranking second in net sales by foreigners. Foreigners mainly net sold secondary battery stocks such as EcoPro (619.6 billion won) and EcoPro BM (303 billion won), as well as financial stocks like KB Financial Group (256.3 billion won) and Shinhan Financial Group (213.4 billion won). This is interpreted as profit-taking mainly on stocks that had recently seen significant price increases.

Although both are semiconductor stocks and have forecasted losses, the securities industry's evaluations diverge. While Samsung Electronics' target price is being revised upward, most target prices and investment opinions for SK Hynix remain 'maintain.' For example, Shinhan Investment Corp. raised Samsung Electronics' target price this month from 70,000 won to 82,000 won, a 17.14% increase. Youngmin Ko, a researcher at Shinhan Investment Corp., analyzed, “Samsung Electronics has overwhelming financial strength, enabling it to prepare most proactively for the future during the downcycle. With changes such as advanced process technology, supply chain restructuring, and preemptive application of advanced ultraviolet semiconductor lithography technology (EUV), it is expected to widen the gap with competitors in the next upcycle and continuously solidify its top position.”

In contrast, the securities industry forecasts that SK Hynix's loss will be larger than initially expected, with Daishin Securities, Eugene Investment & Securities, and IBK Investment & Securities all increasing their estimates for the first-quarter loss. Yuak Park, a researcher at Kiwoom Securities, said, “Since the beginning of the year, the DRAM market has been weaker than expected, and Samsung Electronics' artificial production cuts are not expected to be implemented in the short term, which is a burden. While the mid- to long-term buying perspective on SK Hynix remains valid, a more cautious approach is needed in the short term.”