The Return of Foreigners, Semiconductor Stocks Storm Shopping

Daily Net Purchases Since April...Contrasting Mood from Previous Month
Mainly Buying Semiconductor Stocks...Samsung Electronics Alone Net Bought 1.1245 Trillion KRW

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] As the KOSPI ends its sideways movement and rebounds toward its previous high, foreign capital is flowing back into the domestic stock market. This is attributed to the stabilization of the won-dollar exchange rate due to strong exports, along with expectations for first-quarter earnings. In particular, foreigners appear to be concentrating their purchases on semiconductor leading stocks such as Samsung Electronics and SK Hynix.

According to the Korea Exchange on the 9th, foreign investors have shown net buying for six consecutive trading days this month through the previous day, purchasing a total of 2.3255 trillion won. This is the longest consecutive net buying streak since November 5-24 last year. This contrasts with last month, when net buying occurred on only four trading days in total. The stabilization of the won-dollar exchange rate due to strong export performance is cited as the background for the shift in foreign investors' stance. Sungkeun Kim, a researcher at Korea Investment & Securities, explained, "Exports last month showed a strong recovery even in sectors excluding semiconductors, increasing by 17% compared to the previous year, and the won-dollar exchange rate dropped to the 1,110 won level. First-quarter earnings are continuously being revised upward, and with the global economic recovery continuing, this trend is expected to persist."

Foreign investors particularly focused on the semiconductor sector. During this period, the top two net purchases were both domestic semiconductor "leading stocks": Samsung Electronics (1.1245 trillion won) and SK Hynix (466.9 billion won). Samsung Electronics alone accounts for more than four times the net buying of Kakao (262.5 billion won), ranked third, and ten times that of Kia (115.2 billion won), ranked fourth. Despite the stock price being somewhat stagnant, it is interpreted that they have started bottom-fishing in advance, anticipating a semiconductor super boom from the second quarter.

The industry expects a full-fledged semiconductor boom to begin from the second quarter, starting with a rebound in DRAM prices. Since last month, fixed transaction prices for server semiconductors have already been rising, and other memory semiconductors such as PC DRAM and NAND flash are expected to see a full-scale increase starting this month. Taiwanese market research firm TrendForce forecasted, "Due to supply shortages, server DRAM prices will rise by 20% in the second quarter compared to the first quarter, and high demand will continue until the end of the third quarter."

However, the resurgence of COVID-19 could be a variable affecting the inflow of foreign capital. The number of new confirmed cases, which had remained in the 300-400 range for some time, has surpassed 700 after passing through the 500 and 600 ranges within a week. In response, the government decided to maintain social distancing at level 2 in the metropolitan area and level 1.5 in non-metropolitan areas, and to continue the ban on gatherings of five or more people. Researcher Kim stated, "If quarantine measures are strengthened again, domestic demand recovery will inevitably slow down, while the relative strength of export-oriented stocks will continue to rise. In Korea's case, the vaccination rate is also very low, so there are no other countermeasures besides strengthening quarantine measures."

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