Before and After the US Presidential Election, Foreign Investors Favor 'Battery, Semiconductor, and IT' Stocks

Joe Biden Likely to Win, LG Chem Net Buys of 360 Billion Won on the 6th
Massive Purchases of Samsung Electronics, SK Hynix, and Others
Foreign Investors Lead Stock Market Phase... Watch Exchange Rate Trends

[Asia Economy Reporter Minwoo Lee] Foreign investors have been focusing on buying stocks in sectors such as secondary batteries, semiconductors, and information technology (IT) in the Korean stock market around the time of the U.S. presidential election.

According to the Korea Exchange on the 9th, the stock most net purchased by foreigners from the beginning of this month through the 6th was LG Chem, with a total purchase amount of 714.5 billion KRW. On the 6th, when Joe Biden's victory became highly likely, foreigners net purchased 369.7 billion KRW worth of LG Chem shares in a single day, marking the largest daily net purchase ever. Samsung SDI also ranked third among net purchased stocks with 235.9 billion KRW. Battery companies were quick to secure positions as they were seen as the biggest beneficiaries of Biden’s eco-friendly policies. Earlier, President-elect Biden pledged to invest 338 trillion KRW in electric vehicle research and development (R&D) and to expand 50,000 electric vehicle charging stations.

Semiconductor companies such as Samsung Electronics and SK Hynix also saw significant stock purchases. Samsung Electronics ranked second in net purchases this month with 242.6 billion KRW, following LG Chem. SK Hynix ranked sixth with 83.6 billion KRW. With the U.S. Senate pushing legislation to attract semiconductor manufacturing plants to the country, it appears that investors believe Samsung Electronics and SK Hynix could benefit in the future if they respond swiftly. Samsung Electronics is expected to invest in expanding its foundry at its Austin, Texas plant, and SK Hynix is also anticipated to make indirect investments such as expanding research facilities to fill the gap caused by U.S. regulations on Huawei.

Additionally, foreigners purchased 170.6 billion KRW and 103.7 billion KRW worth of Kakao and Naver, respectively. These amounts correspond to the 4th and 5th largest net purchases by foreigners this month. The two companies recorded record-breaking earnings in the third quarter of this year and are considered to have business models capable of structural long-term growth beyond policy benefits in fintech (finance + technology), online consumption, subscription economy, and software sectors.

As foreign investors’ market leadership strengthens, there is a growing expectation to pay close attention to their investment behavior. On the 30th of last month, foreigners net sold 978 billion KRW on the KOSPI, while individuals net bought 1.414 trillion KRW. The KOSPI dropped sharply by 2.6%. On the 5th, foreigners net purchased 1.135 trillion KRW, and individuals net sold 1.622 trillion KRW. The KOSPI rose by 2.4%. Although the absolute net purchase and sale amounts were larger for individuals, the index’s direction followed foreign investors’ supply and demand.

It is also analyzed that the exchange rate, which significantly influences foreign investors’ investment decisions, should be closely monitored. On that day’s morning in the Seoul foreign exchange market, the won-dollar exchange rate fell to the 1,117 won per dollar level. Hainhwan KB Securities researcher said, "Based on the 12-month maximum drawdown (MDD) of the won-dollar exchange rate, the current level of -12% (won appreciation) has occurred only three times since 2000, and in all cases, the won-dollar exchange rate further declined, resulting in the KOSPI rising by up to about 40% over approximately one year," adding, "It is necessary to closely watch the future trend of the exchange rate and foreign investors’ supply and demand."

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