Foreigners Who Sold 1.2 Trillion Won on KOSPI Bet 320 Billion Won on Bank Stocks

Banks Stocks Bought at Low Prices as Need for Interest Rate Hike Raised

On the 18th, the status board in the dealing room of Hana Bank's headquarters in Euljiro, Jung-gu, Seoul, displays the KOSPI, the KRW/USD exchange rate, and the KOSDAQ index. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Foreign investors, who sold more than 1.2 trillion won net in the KOSPI market last week, are accumulating bank stocks. This is interpreted as them securing bank stocks at low prices amid the rising necessity of interest rate hikes, as bank stocks have recently declined.

According to the Korea Exchange on the 18th, among the top net purchase stocks by foreigners last week, Hana Financial Group (109.6 billion won) and Shinhan Financial Group (88 billion won) ranked 4th and 5th, respectively. KB Financial Group also ranked 8th with 77.5 billion won. Bank stocks accounted for 30% of the top 10. In addition, foreigners collectively bought bank-related stocks such as Woori Financial Group (20 billion won, 25th) and BNK Financial Group (15.2 billion won, 33rd). The total net purchase amount of bank stocks last week reached 321.3 billion won. This contrasts with the total net selling of 1.2492 trillion won in the KOSPI market during the same period.

The stock prices also showed resilience. While the KOSPI fell by 2.10% amid increased volatility last week, Hana Financial Group rose by 1.19%. Since the beginning of this year, foreigners have net purchased 238.2 billion won worth of shares, making it the most favored bank stock among foreign investors. Woori Financial Group (0.10%) and BNK Financial Group (1.73%) also rose. Shinhan Financial Group (-0.89%) and Industrial Bank of Korea (-1.80%) showed smaller declines than the KOSPI. However, KB Financial Group (-2.80%) fell more than the KOSPI.

This is interpreted as reflecting expectations for interest rate hikes in the mid to long term. On the 15th, the Bank of Korea’s Monetary Policy Committee decided to keep the base rate at 0.5%. Although employment and domestic demand have been hit by the COVID-19 pandemic, the asset markets such as real estate and stocks are overheating, making this an inevitable decision. Although no short-term rate hike signals were given, it is analyzed that attempts will be made to gradually shift market participants’ expectations from rate cuts to rate hikes.

Jungwook Choi, a researcher at Hana Financial Investment, explained, "With the presidential election in March next year and the end of the Bank of Korea governor’s term coinciding, there may be interest rate hike movements as early as the second half of next year, but this could be brought forward depending on the housing situation and the containment of COVID-19." He added, "In the latter half of last week, U.S. Treasury yields turned downward, causing overseas bank stocks to weaken, so domestic bank stocks may also pause in the short term. However, large-scale net purchases by foreigners are resuming, and the mid to long-term direction of interest rates is expected to rise, which has increased expectations."

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