[Good Morning Stock Market] Continued Net Buying by Foreigners... Expecting Nvidia's 'Magic'

Expectations for Growth in the Domestic Semiconductor Industry

On the 23rd, the KOSPI is expected to start higher as foreign investors continue their net buying trend.

Overnight at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average hit an all-time high driven by the artificial intelligence (AI) enthusiasm centered on Nvidia. The Dow Jones Industrial Average closed at 39,069.11, up 456.87 points (1.18%) from the previous session. The S&P 500 rose 105.23 points (2.11%) to 5,087.03, and the Nasdaq closed at 16,041.62, up 460.75 points (2.96%).

Nvidia’s better-than-expected Q4 earnings last year fueled optimism about its future outlook, pushing its stock price up more than 16%. Its market capitalization surpassed $2 trillion (approximately 2.6 trillion KRW), setting a historic record high.

This led to improved investor sentiment across the semiconductor sector, with the Philadelphia Semiconductor Index rising more than 5%, and the S&P technology sector increasing over 4%, marking the largest daily gain since May 25 of last year.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) and MSCI Emerging Markets Index ETF rose 1.3% and 1.0%, respectively. Eurex KOSPI 200 futures increased by 0.6%. Considering this, the KOSPI index is expected to open with gains in the range of 0.5% to 0.8%.

In particular, the net buying by foreign investors is expected to be a key factor in the index’s rise. Since the beginning of this month until the previous day, foreign investors have shown a buying advantage in the securities market for 12 out of 14 trading days. Analysts note that such a strong and continuous net buying by foreigners is a rare occurrence.

Cho Chang-min, a researcher at Yuanta Securities, analyzed, “Except for the COVID-19 period, the continuous and strong net buying by foreign investors has generally led to stock market gains, so we maintain a positive view on the potential for further market rises.”

An important point regarding foreign demand is that it has been concentrated in semiconductors rather than broad buying across the domestic market. Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, “The cumulative net buying amount by foreign investors in the domestic market from last year to now is about 25.7 trillion KRW. However, excluding Samsung Electronics, the cumulative net buying amount by foreigners during the same period is only about 400 billion KRW.”

He added, “Concerns about the concentration of semiconductor demand are understandable, but compared to the stock price rises of semiconductor companies in the U.S. and Japan, Korea is relatively lagging behind. In that sense, opportunities in the domestic semiconductor sector can be seen as relatively more open.”

He further noted, “Unlike last year, the inflow of individual investors’ net buying into the semiconductor sector will be an important point.”

Meanwhile, the 1-month Non-Deliverable Forward (NDF) USD/KRW exchange rate in New York is at 1,326 KRW, and reflecting this, the USD/KRW exchange rate is expected to start about 4 KRW lower.