The Return of the 'Big Player' Korea Electric Power Corporation, Is a Rebound Underway?

[Asia Economy Reporter Ko Hyung-kwang] As foreign investors who had been selling Korea Electric Power Corporation (KEPCO) stocks for nearly a month began buying again after a long time, the stock price rebounded sharply. Attention is focused on whether KEPCO's stock price, which had been sluggish due to the delay in electricity rate hikes, can create momentum for a rebound through the buying power of 'big players.'

According to the Korea Exchange on the 14th, KEPCO closed at 20,000 won on the KOSPI market the previous day, up 6.9% from the previous trading day. The stock price, which had remained in the 10,000 won range since the 22nd of last month, recovered to the 20,000 won range after about 20 days. Compared to the low point recorded on March 19th amid the impact of the novel coronavirus infection (COVID-19) (10,550 won), the stock price rose 28%, but it is still 35.9% lower compared to the end of last year (27,800 won).

KEPCO's stock price declined after recording a large deficit last year. KEPCO's operating loss last year was 1.35 trillion won, 6.5 times higher than the previous year's loss (208 billion won). The uncertainty increased as the anticipated electricity rate hike, which was expected to trigger a stock price rebound, was postponed repeatedly.

Foreign and institutional investors have sold KEPCO stocks worth 1.15 trillion won this year alone, hindering the stock price rebound. The scale was 796.3 billion won by foreigners and 353.9 billion won by institutions.

In particular, foreigners continued net selling for 21 consecutive trading days from the 12th of last month to the 10th of this month. The amount sold during this period reached 240 billion won. Foreign investors, who had been consistently selling for the past month, turned to net buying by purchasing stocks worth 14.9 billion won the previous day. The nearly 7% surge in KEPCO's stock price that day was also contributed by net buying from foreigners and institutions. Institutions also bought 8.3 billion won worth of stocks that day.

There is cautious speculation that 'big players' have begun full-scale buying as KEPCO is expected to turn to a large-scale surplus this year thanks to record low oil prices. Yoo Jae-seon, a researcher at Hana Financial Investment, said, "The decrease in the system marginal price (SMP) allows for a reduction in purchased power costs, and fuel cost savings are also appearing due to the decline in coal and oil prices," adding, "Annual profits this year are expected to exceed 3 trillion won."

There is also analysis that the government's inability to continue leaving KEPCO's cost burden unattended could act as an investment opportunity. Choi Go-woon, a researcher at Korea Investment & Securities, said, "This year, especially due to the economic slowdown caused by the COVID-19 crisis, the priority for KEPCO's normalization has been delayed," but emphasized, "Considering the steadily increasing environmental cost burden, the electricity rate system needs to be rationalized."

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