Foreigners Sold Off 9 Trillion Won Worth of Semiconductor Stocks Since COVID-19

[Image source=Yonhap News]

[Asia Economy Reporter Koh Hyung-kwang] Foreign investors have sold more than 9 trillion won worth of semiconductor stocks such as Samsung Electronics and SK Hynix in the domestic stock market over the past two months. Since the outbreak of the novel coronavirus infection (COVID-19), foreign investors have been engaging in 'Sell Korea,' with semiconductor stocks becoming the main target.

According to the Korea Exchange on the 23rd, foreign investors sold a total of 14.9604 trillion won worth of stocks in the KOSPI market over about two months from January 20, when the first COVID-19 case was confirmed in Korea, until the 21st of this month. Following 3.3132 trillion won sold last month, they have already net sold 10.0948 trillion won this month.

Since the pandemic phase began on the 24th of last month, foreign investors have continued massive net selling almost every day except for one day on the 4th of this month. On the 9th, they even set a new record for the largest single-day net selling in Korean stock market history (1.3125 trillion won).

The stocks most heavily sold by foreign investors engaging in 'Sell Korea' are undoubtedly semiconductor stocks. Over the past two months, the top three stocks in foreign net selling were Samsung Electronics, SK Hynix, and Samsung Electronics Preferred Shares, with net sales of 6.7452 trillion won, 1.3338 trillion won, and 1.105 trillion won, respectively. The total sales amount of these three stocks reached 9.184 trillion won, accounting for 61.3% of the total net selling amount (14.9604 trillion won).

Due to large-scale selling by foreign investors, Samsung Electronics' stock price, which was 62,400 won on January 20, fell 27.2% to 45,400 won on the 21st of this month over two months. During the same period, SK Hynix and Samsung Electronics Preferred Shares also dropped by 25.1% and 27.2%, respectively.

The large-scale selling of semiconductor stocks by foreign investors is analyzed not as a forecast of future industry downturns but as an inevitable move to reduce their weighting in the Korean stock market. Roh Dong-gil, a researcher at NH Investment & Securities, explained, "The reason foreign investors are heavily selling semiconductor stocks such as Samsung Electronics and SK Hynix is not because they expect a downturn in the semiconductor industry. As they withdraw funds from emerging markets including Korea, they have no choice but to pull money out of stocks where a relatively large amount of capital has been invested."

Researcher Roh added, "Foreign investors account for 40% of the market capitalization in the domestic KOSPI market, and since the top three KOSPI stocks by market capitalization?Samsung Electronics, SK Hynix, and Samsung Electronics Preferred Shares?make up more than 30% of the KOSPI, they cannot reduce their capital weighting without selling semiconductor stocks."

Most of the semiconductor stocks sold by foreign investors were absorbed by individual investors. Over the past two months, individuals have net bought 16.3762 trillion won in the KOSPI, purchasing Samsung Electronics (6.7766 trillion won), Samsung Electronics Preferred Shares (1.3754 trillion won), and SK Hynix (802 billion won) in that order.

This content was produced with the assistance of AI translation services.