Major Investors Taking Control of Hyundai·Kia Gear Shifts

Expectations for Demand Recovery and Performance Improvement
Rising Trend Driven by Foreigners and Institutions

[Asia Economy Reporter Minji Lee] Hyundai Motor and Kia Motors stocks are accelerating upward on the love calls from major investors. This is because the demand for automobiles, which had been suppressed by the novel coronavirus disease (COVID-19), is showing signs of recovery, raising expectations for improved earnings. The securities industry expects the stock prices to follow an upward curve until the end of the year due to the expansion of electric vehicle market share and increased new car sales.

According to the Korea Exchange on the 6th, Hyundai Motor's stock price recorded 187,000 won, up 5% from the previous day, marking the highest closing price of the year. This is the highest level since December 2014. Kia Motors rose 8% in one day, closing at 50,500 won. It is the first time in 4 years and 6 months that Kia's stock price exceeded 50,000 won during trading hours.

The rise in stock prices was driven by foreign investors and institutional investors. The stocks most purchased by these two groups in the previous day's stock market were Hyundai Motor, with foreigners and institutions buying stocks worth 41.5 billion won and 50.2 billion won, respectively. Kia Motors stocks were also net purchased worth 17.8 billion won and 38 billion won, ranking fifth in scale.

Last month's strong automobile sales in the domestic market and the U.S. region are interpreted as having raised expectations for earnings growth. According to provisional sales performance, Hyundai Motor and Kia Motors' sales volume in the domestic market increased by 33.8% and 21.9%, respectively, compared to the same period last year. It is estimated that demand, which had been sluggish due to the second wave of COVID-19 and typhoon impacts in August, has normalized again. Hyundai Motor significantly increased sales centered on high-margin new models such as the Grandeur and G80, while Kia Motors showed strong sales of new mid-to-large-sized models such as the Carnival, Sorento, and K5.

Overseas, a sharp recovery was seen mainly in the U.S. market. Hyundai Motor and Kia Motors sold 55,918 and 55,519 units, respectively, in the U.S. market last month, up 3.7% and 24.4% compared to the same period last year. Kia Motors recorded its highest sales volume since entering the U.S. market in 1994. Currently, the combined market share of the two companies is 8.2%, up 0.5 percentage points from the same period last year. This contrasts with the declining combined market share of Japanese companies Nissan, Subaru, Mitsubishi, and Toyota.

Kim Minseon, a researcher at Kiwoom Securities, said, "Nissan, which has a high proportion of sales to rental car companies, is experiencing a decline in market share due to the impact of COVID-19 and poor profitability, so Hyundai Motor and Kia Motors are expected to benefit." He added, "Hyundai Motor and Kia Motors plan to sell the 7th generation Avante, 4th generation Santa Fe F/L, GV80, and others this year," and explained, "Except for Nissan, the three Japanese companies do not have many plans to launch new models, so a favorable new car cycle for domestic companies will unfold."

Expectations for eco-friendly mobility materials such as hydrogen and electric vehicles are also valid. Kim Guiyeon, a researcher at Heungkuk Securities, explained, "Hyundai Motor will invest 20 trillion won from this year to 2025 in autonomous driving, future mobility, and electrification sectors to strengthen its position as a next-generation mobility solutions provider," adding, "If this value is highlighted, the stock price will show another upward trend."

Meanwhile, as expectations for earnings improvement grow, buying momentum continues for Hyundai Motor Group stocks. In the previous day's stock market, Hyundai Steel and Hyundai Wia rose 9% and 6%, respectively, with foreign and institutional investors net purchasing stocks worth 22 billion won and 7.1 billion won, respectively.

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