Shaky April Stock Market... Foreigners Focused Buying Only Samsung Electronics

Profit-taking in secondary battery stocks like POSCO Holdings and Ecopro
"KOSPI expected to trend neutral to below between 2300 and 2600 in May"

Foreign investors' profit-taking movements have become prominent this month. In particular, the KOSDAQ market, which had experienced a rapid rally mainly in secondary battery-related stocks since the beginning of the year, is undergoing a correction as foreign net selling intensifies. The saying "Sell in May," often quoted like a proverb in the securities industry, suggests that the correction phase may continue for the time being.

According to the Korea Exchange Information Data System on the 26th, the stock most sold by foreign investors in the domestic stock market this month was POSCO Holdings, with a net sale of 2.6662 trillion KRW. SK Hynix followed with net sales of 424 billion KRW, ranking second, showing a difference of more than 2 trillion KRW compared to POSCO Holdings. POSCO Holdings closed at 379,500 KRW based on the previous day's closing price, nearly 40% higher than at the beginning of the year. On the 17th, it surged intraday to 436,000 KRW, breaking its 52-week high.

The securities industry points out the need to be cautious about excessive stock price increases. Baek Kwang-je, a researcher at Kyobo Securities, said, "The stock price surged due to the market's secondary battery supply-demand concentration highlighting lithium's industrial value," adding, "While the future growth potential of the new business and the company's new business direction are positive, the stock price rise due to market theme formation and supply-demand concentration is considered excessive." He downgraded the investment opinion to 'Hold.' The target price for POSCO Holdings was also set at 350,000 KRW, lower than the current price.

EcoPro, a 'hot potato' in the stock market, also ranked among the top stocks in foreign net selling. Foreign funds withdrew 404.3 billion KRW this month alone. LG Chem followed with 145 billion KRW, and L&F recorded net sales of 138.9 billion KRW. Similar to POSCO Holdings, foreign investors appear to be taking profits mainly from secondary battery-related stocks that have surged in recent months.

Overall, foreign investors net purchased 798.3 billion KRW in the domestic stock market this month. By market, they bought 2.0207 trillion KRW worth in the KOSPI market but sold 683.1 billion KRW in the KOSDAQ market. However, in the KOSPI market, foreigners bought 2.5806 trillion KRW worth of Samsung Electronics shares alone. Excluding Samsung Electronics, foreign investors effectively recorded net sales even in the KOSPI market.

Next month, the U.S. Federal Reserve (Fed) will decide whether to raise the benchmark interest rate. A 0.25 percentage point increase is likely, and while market attention is focused on "when the rate will be cut," there is significant uncertainty about this. The securities industry forecasts that the domestic stock market, which surged earlier this year, will face a correction phase for the time being, causing the index to retreat somewhat. Kim Yong-gu, a researcher at Samsung Securities Research Center, explained, "The divergence between the Fed, which plans to keep rates steady within the year, and the market, which assumes rate cuts after September, delayed global manufacturing recovery, limited China reopening spillover effects, and difficulties in U.S. Democratic and Republican negotiations on fiscal spending and debt ceiling are three conflicting factors likely to act as headwinds for domestic and international stock market trends in May." He added, "The KOSPI in May is expected to show a neutral to below-neutral price movement between 2300 and 2600 points."

Kim Byung-yeon, a researcher at NH Investment & Securities, also said, "The stock market, which has outpaced fundamentals, is likely to take a breather," adding, "The so-called statistical anxiety of 'selling in May' and the continued divergence between the Fed and financial markets regarding U.S. rate cuts in the second half of the year are also factors for stock market correction." However, he added, "If a KOSPI correction occurs, levels below 2400 points are considered a 'buy zone,' and over the year, it is expected to gradually level up through repeated rises and falls."