Foreigners Always Have a Plan... Stock Prices Rise for Companies with Increased Shareholding Ratios

Hanwha Aero and Cosmo Chemical Increase Shareholding
Many Companies with Double-Digit Stock Price Growth

This year, the domestic listed companies with the largest increase in foreign ownership were Hanwha Aerospace, Meritz Financial Group, Cosmo Chemical, T3, Mgame, and InBody. The stock price growth rates of these companies were generally higher compared to others.

According to the financial investment industry on the 10th, foreign investors have net purchased 6.747 trillion KRW worth of stocks on the Korea Composite Stock Price Index (KOSPI) market since the Year of the Rabbit began. They net purchased over 8 trillion KRW from the beginning of the year until mid-February, then turned to net selling in March, and recently have shown a buying advantage again. This contrasts with individuals and institutions, who have net sold KOSPI stocks worth 5.306 trillion KRW and 2.0389 trillion KRW respectively since the start of the year. During the same period, foreigners net sold 475 billion KRW worth of KOSDAQ stocks.

Foreign Investors’ Top KOSPI Picks: ‘Hanwha Aero & Cosmo Chemical’

The company with the largest increase in foreign ownership on the KOSPI is Hanwha Aerospace. The foreign ownership of Hanwha Aerospace increased by 8.98 percentage points to 32.83%, closely approaching the 33.98% held by Hanwha and its affiliates. The stock price surged 55.28% during the same period. A securities industry official analyzed, "Hanwha Aerospace acts as the intermediate holding company for the defense sector of the Hanwha Group, reflecting expectations for export growth in domestic defense companies." Foreign investors have maintained their buying momentum, continuing net purchases of Hanwha Aerospace for 12 consecutive days recently.

During the same period, foreign ownership in Meritz Financial Group and Aprogen also increased by 8.27 percentage points and 7.69 percentage points, respectively. Meritz Financial Group’s stock price has sharply risen since last October when it decided to fully incorporate its subsidiaries Meritz Fire & Marine Insurance and Meritz Securities. The stock price rose from a low of 1,950 KRW per share last year to 48,650 KRW at the beginning of the year, then recently gave back some gains and is trading in the 43,000 KRW range. Foreign investors have recently shifted to a selling bias. Aprogen, a bio company, showed a stock price increase of 161% compared to the beginning of the year. However, due to a capital reduction that decreased the number of shares, the stock price increase appears inflated, and the actual stock price has declined compared to the start of the year.

Cosmo Chemical, whose foreign ownership increased by 7.52 percentage points, saw its stock price nearly triple. The stock price rose from 23,250 KRW in early February to 75,100 KRW on the 7th. The year-to-date stock price increase reached 215.83%. As it emerged as a domestic cathode material producer following EcoPro BM, foreign investors as well as institutional and individual investors concentrated their purchases. Although foreign ownership did not increase significantly, the stock price of its affiliate Cosmo Advanced Materials also showed a steep upward trend, rising from around 50,000 KRW at the beginning of the year to 192,200 KRW as of the 7th.

Focused Buying of KOSDAQ Tech Companies such as ‘Games & Robots’

On the KOSDAQ, foreign ownership increased most significantly in game developers T3 and Mgame, and bio-diagnostic equipment manufacturer InBody. T3’s foreign ownership rose by 20.33 percentage points to 20.62%. Mgame and InBody each saw increases of 9.87 percentage points, bringing foreign ownership to 12.6% and 35.86%, respectively. During the same period, stock prices also sharply rose: T3 by 28.33%, Mgame by 22.70%, and InBody by 51.50%.

T3 is a game development company focusing on the rhythm dance genre game ‘Audition’. After listing on the KOSDAQ market in November last year, its stock price continuously declined to 1,610 KRW per share but recently showed a rising trend alongside other game companies due to the possibility of China issuing game licenses (permission to service games in China). Mgame’s stock price has also been on an upward trend recently, supported by improved earnings and the license issue.

The stock prices of Jeostem and Neuromeka, whose foreign ownership increased by more than 7 percentage points, rose 122.33% and 125.84% respectively compared to the start of the year. Jeostem is a semiconductor design company recognized for its capabilities in system semiconductor design, with earnings and stock price rising together. Neuromeka, which entered the KOSDAQ last year, saw its stock price sharply rise as robot companies gained attention following Samsung Electronics’ investment in Rainbow Robotics.

Yeom Dong-chan, a researcher at Korea Investment & Securities, said, "As the US dollar stabilizes again, foreign buying momentum in the domestic stock market, which had been sluggish for a while, is likely to resume." He added, "While growth companies’ stock price uptrends may continue, if foreign buying flows in earnestly, the KOSPI is expected to outperform the KOSDAQ."