'Undervalued Growth Stocks' Attracting Foreign Investors' Love Calls

2 Trillion Won Net Purchase from 19th to 30th
Semiconductors, Secondary Batteries, Healthcare 'Jupjup'

Recently, foreigners have been accumulating growth stocks such as semiconductors, healthcare, and secondary batteries in the KOSPI market.

According to the Korea Exchange on the 30th, foreigners net purchased a total of 2.188 trillion won from the 19th to that day. Although they net sold 13.5 billion won on that day, ending their buying streak, they had recorded net purchases for seven consecutive trading days until the previous day. This is the longest period since the 12 consecutive trading days of net purchases recorded from January 11 to 27, 2023.

Foreigners began selling off KOSPI stocks earlier this year. From the 2nd to the 18th of this month, they net purchased 1.219 trillion won, but excluding the block deal volume of Samsung Electronics on the 11th (2.1412 trillion won), they effectively net sold 922.2 billion won. The reason foreigners switched to net buying from the 19th amid this situation is due to the increased price attractiveness as the KOSPI continuously declined since the beginning of the year. In fact, the KOSPI, which recorded 2675.80 on January 2, fell to 2435.90 on the 17th of this month. After foreigners switched to net buying, the index rose to 2498.81. Laborngil, a researcher at Shinhan Investment Corp., explained, "Buying demand flowed into growth stocks that had been excessively oversold since the beginning of the year," adding, "It is interpreted that risk asset preference expanded due to the decline in U.S. Treasury yields and exchange rates."

The stocks most purchased by foreigners were in semiconductors, bio, healthcare, and secondary batteries. Foreigners net purchased Samsung Electronics and SK Hynix by 992.6 billion won and 65.9 billion won, respectively. These were the first and fourth most net purchased stocks by foreigners. They also bought 55 billion won worth of Hanmi Semiconductor, which manufactures semiconductor equipment. Hanmi Semiconductor ranked seventh in net purchases. This is interpreted as expectations of an industry rebound following the announcement of strong fourth-quarter earnings by global semiconductor companies.

Samsung Biologics, a healthcare-related stock, ranked second in foreign net purchases. A total of 240.8 billion won was purchased. On that day, Samsung Biologics rose intraday to 829,000 won, nearing a 52-week high. This was influenced by strong fourth-quarter earnings last year and the recent announcement of favorable results by Lonza, a competitor in the biopharmaceutical CDMO (Contract Development and Manufacturing Organization) sector.

Kia ranked third, with net purchases of 102.5 billion won. Kia announced strong fourth-quarter earnings last year. Additionally, dividend increases and shareholder return policies such as share buybacks and cancellations seem to have enhanced its attractiveness. Nam Jushin, a researcher at Kyobo Securities, stated, "The shareholder return policy has increased investment attractiveness," and added, "Following the announcement of share buybacks and cancellations (conditional 100% cancellation rate), the stock price floor is expected to be supported."

Secondary battery stocks were also included in foreigners' baskets. They purchased 48.2 billion won and 36.6 billion won worth of POSCO Future M (ranked 9th) and POSCO Holdings (ranked 13th), respectively. Secondary battery-related stocks have recently been going through a difficult period. Concerns about weak fourth-quarter earnings last year and a slowdown in the electric vehicle market have overlapped. However, it is interpreted that low-price buying demand has flowed in due to the prolonged recent downtrend. Researcher Laborngil explained, "In the case of secondary batteries, it seems that buying demand flowed in due to the perception of excessive decline and the rebound of Tesla."