Samsung Electronics, SK Hynix, Hanmi Semiconductor, Jusung Engineering Lead Net Buying
Expectations for Industry Recovery Next Year... Could Also Be Short Covering Movements, Trends Need Monitoring
Foreign investors, who sold off more than 3 trillion won in the domestic stock market last month, have shown a markedly different trend this month. They have already purchased over 1.7 trillion won since the beginning of the month. However, this can be seen as short covering (repurchasing to cover short sales) due to the temporary ban on short selling, so it is expected that the trading trends of foreign investors will need to be monitored for the time being.
According to the Korea Exchange on the 9th, foreign investors have net purchased 1.7355 trillion won in the domestic stock market up to the previous day this month. Foreign investors had recorded net sales for three consecutive months until last month, selling off 3.3896 trillion won in just the previous month.
This month, foreign investors have focused their net purchases on semiconductor stocks. They bought the most of Samsung Electronics, with net purchases of 607.3 billion won. SK Hynix followed with 434.9 billion won. Other top net purchases included Hanmi Semiconductor (54.2 billion won), Jusung Engineering (48.7 billion won), and Hana Micron (46.5 billion won).
The net buying of semiconductor stocks by foreign investors is interpreted as being driven by expectations of an industry recovery next year. Hyungtae Kim, a researcher at Shinhan Investment Corp., explained, "As in past experiences, the global inventory cycle and the semiconductor industry's inventory situation are showing similar patterns in this cycle, and the global manufacturing economy started to rebound from its bottom in July-August," adding, "It leads to the conclusion that it is time to consider increasing the weighting of semiconductor stocks in the macroeconomic cycle." He further noted, "Proactive weighting increases aimed at next year's industry rebound should be made during the fourth quarter of this year."
While the secondary battery and machinery sectors, which showed strength this year thanks to government spending, are expected to fall short of expectations next year, AI (Artificial Intelligence) and semiconductor stocks, which can grow independently of government spending, are forecasted to perform well. Jaehyun Kang, a researcher at SK Securities, analyzed, "Sectors like secondary batteries and machinery, which performed well in the first half of this year, can be seen as government spending themes. They were able to grow faster thanks to the U.S. Inflation Reduction Act (IRA), and the diversification of regional sales distribution was largely influenced by subsidies from Europe and other regions." He added, "However, since government spending in various countries will not be the same as this year, growth expectations will weaken accordingly." Kang explained, "On the other hand, AI demand is structurally bound to grow, and especially companies cannot afford to cut investments even during economic slowdowns to avoid being left behind. The biggest beneficiary of this is semiconductors, where growth is guaranteed regardless of government spending, and sectors that had concentrated supply this year may experience fluctuations, so semiconductors are likely to show relatively good performance."
Although foreign investors have shown buying momentum this month, the possibility that this trend may be short-lived cannot be ruled out. It appears to be short covering following the temporary ban on short selling. Foreign investors net purchased 1.1901 trillion won on the first day of the short selling ban on the 6th alone. Yujun Choi, a researcher at Shinhan Investment Corp., said, "Short covering demand due to the short selling ban has led to a short-term inflow of foreign investor supply, but since two-way strategies are blocked, the market influence of foreign investors may gradually decrease."
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