[Super Rich Investment] The 'One Pick' of Billionaires Managing 1 Billion Won: Samsung Electronics

Growth Stocks Pushed Out, Preference for Large-Cap and Value Stocks
Stock Market Expected to Strengthen... KODEX Leverage Ranked 3rd in Net Buying

"Still Samsung Electronics."

The stock most purchased at the beginning of the year by wealthy investors managing assets of over 1 billion KRW was Samsung Electronics, the top company by market capitalization in Korea. There was a clear preference for value stocks over growth stocks, and large-cap stocks over neglected stocks. These investors evenly added top market cap stocks such as SK Hynix, Samsung SDI, Kia, and Hyundai Motor? which had lost investor attention last year due to the momentum of growth stocks like secondary battery stocks? to their portfolios.

Top Two Semiconductor Stocks, Samsung Electronics and SK Hynix, Rank 1st and 2nd in Net Purchases

On the 19th, an analysis of the stock purchase status of individual investors holding an average daily stock balance of over 1 billion KRW for pure stock investment (from January 2 to 12) by NH Investment & Securities Big Data Center showed that Samsung Electronics ranked first in net purchases. Large investors net bought 20 billion KRW worth of Samsung Electronics, betting on undervalued value stocks amid the semiconductor market downturn. Samsung Electronics, which was close to 80,000 KRW per share, recently saw its stock price fall below the 80,000 KRW level after its earnings announcement. Although the stock price has been somewhat stagnant since the new year, the securities industry generally maintains a positive outlook by raising or maintaining target prices. This is because semiconductor exports and price recovery are expected to continue this year, leading to improved earnings from the first quarter.

The second most picked company after Samsung Electronics was SK Hynix. Despite Samsung Electronics’ earnings shock, expectations for semiconductor earnings remain strong in the securities industry. IBK Investment & Securities and DB Financial Investment forecast that SK Hynix’s fourth-quarter operating profit will return to black after a year.

Investment preference for the semiconductor sector is also confirmed by surveys. Samsung Securities conducted a survey on '2024 Stock Market Outlook and Investment Plans' targeting 368 clients with assets over 3 billion KRW, and half of the respondents identified artificial intelligence (AI) and semiconductors as promising industries.

Shin Su-yeon, team leader of NH Investment & Securities Premier Blue Samsung Center, explained, "The top stocks purchased by high-net-worth investors at the beginning of the year can be seen as semiconductor and automobile stocks. This is due to expectations of a global semiconductor market recovery and increased demand for high-bandwidth memory (HBM) driven by artificial intelligence (AI), which raises optimism for semiconductor stocks."

Betting on Stock Market Rise... Concentrated Purchases of Traditional Value Stocks like Automobiles and Finance

The third most purchased item by super individual investors was KODEX Leverage. This product tracks twice the daily return of the KOSPI 200 index. As the index steadily rose with the Santa rally until the end of last year, investors seemed to anticipate a strong domestic stock market going forward. Contrary to expectations that investors managing over 1 billion KRW would prefer long-term investments, there was also strong demand for short-term products.

Other stocks in the top net purchase list included Samsung Securities, Kia, Samsung Electro-Mechanics, and Hyundai Motor. Traditional value stocks such as automobiles and finance, which had been overshadowed by the soaring prices of growth stocks, are now receiving renewed attention.

Team leader Shin analyzed, "In the case of Hyundai Motor and Kia, it is believed that expectations of global interest rate cuts and the resulting reduction in installment interest rates have led to demand recovery and the appeal of low valuations."

There is also an opinion that the historical pattern of value stocks strengthening after the growth stock-led market ends will repeat. Seol Tae-hyun, a researcher at DB Financial Investment, stated in the 'Value Stock Investment Strategy Report' that "the reason for the value stock phenomenon after the industrial revolution bubble ends is due to Gartner’s Hype Cycle, where initial excitement about new technologies peaks, bubbles form in stock prices, and then bubbles burst as excessive expectations decline."

Among the stocks heavily purchased by super individual investors was Samsung SDI, ranking in the top five. Samsung SDI’s stock price peaked at 793,000 KRW (closing price on March 7) last year and then declined for nearly a year. The securities industry has recently lowered Samsung SDI’s target price one after another, citing poor earnings.

On the other hand, some view this as a highly attractive investment opportunity. Lee Ju-young, a researcher at Ebest Investment & Securities, said, "The current stock price corresponds to a 12-month forward price-to-earnings ratio (PER) of 13.6 times and a price-to-book ratio (PBR) of 1.3 times, which is historically at the lowest level. Because the valuation attractiveness is very high, we maintain a buy investment opinion."

Additionally, wealthy investors purchased about 80 million KRW worth of POSCO DX, which moved from KOSDAQ to KOSPI, and invested tens of millions of KRW in secondary battery stocks such as SK Innovation and EcoPro.