[Practical Finance] Chaotic April... Where Did the Wealthy Invest?

Analysis of 'Big Investor' Portfolios Investing Over 1 Billion KRW
Samsung Electronics Tops Net Purchases...Focused Buying on Semiconductor Materials and Parts Stocks

What stocks are included in the investment baskets of wealthy investors in early April, amid overlapping domestic and international variables such as policy uncertainty following the April 10 general election results and delays in the timing of U.S. interest rate cuts? Asset owners managing over 1 billion KRW through stock investments mostly bought Samsung Electronics, the leading semiconductor stock, which is in the process of recovering from this year's low point. Even at the beginning of the year, when the stock market was at its lowest, Samsung Electronics was the clear top pick among wealthy investors. Although the stock market has been on a downward trend since early this month, asset owners actively purchased leveraged exchange-traded fund (ETF) products betting on stock price increases. Pharmaceutical and biotech stocks like HLB and Alteogen were also among the main stocks bought by asset owners.

On the 4th, Samsung Electronics' closing price was displayed on the monitor at the Korea Exchange PR Center in Yeouido, Seoul, where Samsung Electronics once again reached a 52-week high in just two days. Photo by Jinhyung Kang aymsdream@

Wealthy Investors Bet on Samsung Electronics and Index Rise... Focused Buying on Korea Electric Power with Value-Up Tailwind

According to an analysis of stock purchase status by individual investors holding an average daily balance of stocks worth over 1 billion KRW purely for stock investment (from April 1 to 12) by NH Investment & Securities Big Data Center on the 17th, Samsung Electronics ranked first in net purchases. Major investors net bought 3.4 billion KRW worth of Samsung Electronics during this period, joining the semiconductor stock rally. The reason asset owners concentrated their purchases on Samsung Electronics is interpreted as reflecting recent memory price increases pushing up the stock price, strong performances by Nvidia and Micron, demand for high-bandwidth memory (HBM), and expectations for semiconductor export recovery. Samsung Electronics was also the company most bought by foreigners in the first quarter of this year.

Samsung Electronics' stock price had been trapped in a box range of 50,000 to 70,000 KRW for over two years after hitting the 90,000 KRW level in September 2021. However, after entering the 80,000 KRW range on the closing price basis on March 28, it recorded 85,300 KRW on April 4, marking the highest closing price since April 5, 2021. But as many retail investors who had been holding for a long time began to realize profits, the stock price fell to 82,200 KRW as of the 15th. Nevertheless, expectations for further stock price increases remain. Hana Securities raised the target price for Samsung Electronics from 100,000 KRW to 106,000 KRW in a report issued on the 15th, citing improved earnings forecasts due to favorable memory market conditions.

The second most purchased item after Samsung Electronics was leveraged ETF products betting on stock price rises. Asset owners bought 2.6 billion KRW worth of ‘KODEX KOSDAQ150 Leverage,’ which tracks the KOSDAQ150 index at twice the rate, over the past ten days.

During the same period, KODEX Leverage also ranked within the top five net purchases. Last week, the KOSPI closed at 2,681.82, down 32.39 points from the previous week’s 2,714.21, continuing a sluggish trend. However, despite this situation, asset owners, anticipating a strong domestic stock market ahead of the first quarter earnings season, concentrated their purchases on index rise products, holding on to hopes for a rebound.

The third most held stock in asset owners’ baskets was Korea Electric Power Corporation (KEPCO). Recently, KB Securities raised KEPCO’s target price from 23,000 KRW to 27,000 KRW, citing improved operating profits due to increased power sales margins. The government’s ongoing value-up program also supported the stock price rise. KB Securities researcher Jeong Hye-jung analyzed, "With increased power sales margins, KEPCO’s operating profit for the first quarter of 2024 is expected to improve by 8 trillion KRW year-on-year, continuing its turnaround momentum. KEPCO, which had not paid dividends due to consecutive past losses, is expected to resume dividends this year after achieving a significant turnaround, which is also positive."

HLB and Alteogen Rank 6th and 7th in Purchases... Ecopro, Despite Challenges, Gets Another Chance

Asset owners also focused on LG Chem, whose stock price fell more than 8% this month. The stock price, which was 430,500 KRW on April 1, dropped to 394,500 KRW on the 15th, but asset owners saw this as a buying opportunity. The securities industry forecasts undervaluation attractiveness for LG Chem, expecting profitability in its key business, the cathode material sector, to recover from the second half of the year. NH Investment & Securities researcher Choi Young-kwang said, "The price-to-book ratio (PBR) based on the expected financial statements at the end of this year is about 0.9 times, a historical low."

Asset owners also bet on pharmaceutical and biotech stocks such as HLB and Alteogen. The U.S. Food and Drug Administration (FDA) is expected to announce its decision on HLB’s first-line liver cancer treatment approval in May. Alteogen’s stock price soared vertically after announcing at the end of February that it would change its contract with global pharmaceutical company Merck, signed in 2020, from non-exclusive to exclusive. Alteogen’s stock price, which was in the 90,000 KRW range at the end of February, surged to the 200,000 KRW range by the end of March. However, after news of a 30 billion KRW block deal by co-founder Dr. Jeong Hye-shin at the end of last month, the stock price dropped to the low 160,000 KRW range. On the 15th, Alteogen closed at 171,300 KRW, successfully rebounding.

Semiconductor materials, parts, and equipment stocks such as Dongjin Semichem and Hanmi Semiconductor were also among the top picks of asset owners, ranking within their top ten. This reflects the judgment that the favorable wind from the semiconductor market recovery will naturally extend to materials, parts, and equipment stocks.

The ninth most net purchased stock by high-net-worth investors was Ecopro. Ecopro announced on the 7th that it would proceed with a 5-for-1 stock split. Although it ranked high in net purchases, Ecopro’s stock price performance has been disappointing. The stock price, which was 634,000 KRW at the beginning of the year (April 1), fell 18% to 517,000 KRW on the 15th.