[Click eStock] "Foreign Demand Not Negative Since Emergency Martial Law"

Shinhan Investment Corp. analyzed on the 11th that foreign demand after the emergency martial law is not as negative as expected.

Donggil Noh, a researcher at Shinhan Investment Corp., explained, "Considering the futures market as well, the pace of foreign withdrawal from domestic stocks is somewhat subdued. This is because the US manufacturing index has shown a rebound trend since the presidential election, indicating signs of economic improvement, along with expectations for China's stimulus measures and export stock foreign exchange gains due to the sharp rise in the won-dollar exchange rate."

Researcher Noh pointed to valuation as the most important factor. He said, "The KOSPI 12-month trailing price-to-book ratio (PBR) fell to around 0.8 times at the yearly low on the 9th," adding, "This level is close to a historical low in a phase where liquidity risk does not spread. It is a reason for bargain buying."

Researcher Noh stated that after the emergency martial law, foreigners increased their weights in artificial intelligence (AI) and defense sectors by industry, while reducing weights in policy stocks. He analyzed, "By confirming the trading patterns of foreigners who hold the key to supply and demand, we can gauge the mid- to long-term direction. Semiconductor, defense, software, healthcare, and entertainment sectors used price adjustments as buying opportunities, whereas financial and automobile sectors related to value-up policies reduced their weights."

The current situation is not negative for the mid- to long-term direction, but caution is needed around the simultaneous expiration of futures and options. Researcher Noh pointed out, "The critical point is the simultaneous expiration of futures and options on the 12th," adding, "Foreigners' futures rollovers have reached about 35,600 contracts since the September expiration date. We need to first check the December expiration."