Meritz: "2 Trillion Won Net Foreign Sell-Off Over Two Days... Momentum Remains Strong"

Despite concerns over excessive investment in artificial intelligence (AI) surrounding the US stock market, which have led to a net foreign sell-off of approximately 2 trillion won in the Korean stock market recently, domestic securities firms have analyzed that the market's momentum remains robust.

According to Meritz Securities on December 17, foreign investors recorded a net sell-off of 2 trillion won in the KOSPI market over two days, December 15 and 16, reversing two-thirds of the 3 trillion won net purchases made during the 10 trading days from December 1 to 12. Of this, about 1 trillion won came from Samsung Electronics (876 billion won) and SK Hynix (311 billion won).

Lee Sanghyun, a researcher at Meritz Securities, noted that the recent earnings reports from Oracle and Broadcom fell short of expectations, stating, "AI-related concerns in the US stock market have resulted in foreign sell-offs in the Korean stock market as well." This week, Micron's earnings announcement, an interest rate hike by the Bank of Japan (BOJ), and the release of US inflation data are also scheduled.

Lee analyzed, "This year, during the seven cycles of net foreign buying and selling, the KOSPI index posted an average return of +8.7% during net buying periods and -0.8% during net selling periods."

He also pointed out, "With the inflow of foreign capital being crucial for index gains, it is encouraging that the stocks most heavily bought during the two-day net selling period are those with strong recent momentum." He emphasized, "Foreign investors' preferences have not changed significantly, as evidenced by their net purchases of high-momentum stocks such as APR, ISU Petasys, Daeduck Electronics, and Hyosung Heavy Industries."

He added, "Despite net foreign selling, market momentum remains solid," and noted, "Among high-momentum stocks, companies with a steady rise in earnings per share (EPS) are particularly attractive."