Even as Foreigners Take Profits, 'Stronger' KOSPI Bull Market Bets... Revisiting Growth Stocks

[Asia Economy Reporter Lee Seon-ae] The KOSPI is setting new records, raising expectations for a bullish market, but concerns about volatility are emerging due to foreign investors' selling pressure. However, securities firms predict that even if foreign selling intensifies, the domestic stock market's strengthened resilience will help it overcome volatility and maintain an upward trend driven by corporate profit improvements.

According to the Korea Exchange on the 23rd, the KOSPI closed at 3,177.52, up 5.86 points (0.18%) from the previous day. Foreign investors recorded net sales of 156.4 billion KRW, marking two consecutive days of net selling. Notably, on the previous day, they sold a net 1.4286 trillion KRW in a single day. This is the sixth-largest volume since the domestic stock market opened.

Experts view this net selling as profit-taking. Periods of large-scale net selling by foreign investors have coincided with negative news or supply-demand issues. In the case of the 21st, the KOSPI had risen on 13 out of 15 trading days in April, creating a situation where profit-taking desires could emerge.

Choi Yoo-jun, a researcher at KB Securities, explained, "After the KOSPI hit an all-time high in January this year, foreign investors engaged in profit-taking sales. In April, as the KOSPI rose on 13 out of 15 trading days and approached new highs again, foreign investors' desire for profit-taking seems to have increased." In fact, when the KOSPI reached an intraday record high of 3,266.23 on January 11, foreign investors sold off profit-taking stocks, resulting in net sales of 1.3365 trillion KRW over two days.

Although foreign selling may continue, there is growing confidence that the KOSPI will not experience significant volatility. Researcher Choi stated, "We experienced foreign investors' profit-taking sales after new highs in January as well, but unlike then, the current bullish momentum is driven not by price-to-earnings ratio (PER) increases but by profit growth. Since the market's resilience has strengthened, we expect the KOSPI's volatility to remain limited going forward." While valuations (stock price relative to corporate value) were rising in January, recently, corporate earnings improvements have been supporting stock price increases.

Meanwhile, foreign investors continue profit-taking but are building portfolios focused on growth stocks. From the beginning of this month through the 22nd, the stocks most purchased by foreign investors were SK Telecom (343.5 billion KRW), Samsung Electronics (312.0 billion KRW), POSCO (229.7 billion KRW), and LG Chem (148.5 billion KRW). Foreign investors' interest in large growth stocks such as semiconductors and secondary batteries is expected to continue for the time being. Roh Dong-gil, a researcher at NH Investment & Securities, assessed, "Positive views on semiconductors, batteries, and other sectors favored by foreign investors persist."

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