Amid Short Selling Bombardment, Foreigners Choose SK Hynix

Net Purchase Exceeding 110 Billion Won the Previous Day
Positive Interpretation of Strong Earnings and Early Execution of Facility Investment

[Asia Economy Reporter Minwoo Lee] Foreign investors, who dumped nearly 1 trillion won worth of short-sell orders, focused their buying on SK Hynix. This is seen as a positive interpretation following strong first-quarter earnings this year and the early execution of part of next year's capital expenditures.

According to the Korea Exchange on the 4th, the stock most purchased by foreign investors the previous day was SK Hynix. They net bought a total of 113.4 billion won. This was the largest single-day net purchase since April 1, when they net bought 345 billion won. This contrasts with the continuous selling trend since April 20, except for one day (April 27).

After the short-selling ban was lifted for the first time in 14 months, foreign investors poured nearly 1 trillion won worth of short-sell orders but instead concentrated their buying on SK Hynix. The stock price also rebounded. Although it had been falling continuously since April 27, it closed up 2.73% the previous day. The short-selling transaction amount was 7.3 billion won, ranking 32nd among all KOSPI stocks, but it is evaluated as having held up well due to the inflow of foreign buying. LG Chem, which ranked second in foreign net purchases the previous day (68.8 billion won), became a target of short selling and its stock price closed down 2.68% that day. LG Chem’s short-selling transaction amount was 27.8 billion won, the fourth highest among all KOSPI stocks.

The positive interpretation of strong first-quarter earnings this year and the early capital investment is believed to have attracted investor sentiment. SK Hynix recorded consolidated sales of 8.4942 trillion won and operating profit of 1.3244 trillion won in the first quarter of this year, up 18% and 65% respectively compared to the same period last year. This was due to strong demand for memory semiconductors for PCs and mobiles. In particular, as non-face-to-face (untact) work increased due to COVID-19, demand for laptops and PCs surged significantly. In the second quarter, the server DRAM market is expected to grow significantly as cloud companies increase investments in new data centers. To prepare for this improvement in the business environment, SK Hynix decided to advance the execution of part of next year’s capital expenditures. Accordingly, this year’s capital expenditure is expected to exceed 10 trillion won.

Younggun Kim, a researcher at Mirae Asset Securities, said, "The early execution of capital expenditures can be interpreted as evidence of strong demand or a change in supply strategy. With Intel’s new product rollout expanding in the second half, server replacement demand is expected, and as the number of 5G smartphone models increases, the amount of memory installed for mobile devices will increase, driving demand in the second half."

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