Foreigners' Massive Sell-Off in Semiconductors, Debt Investment by Individuals vs. Individuals, Foreigners Picking Up Second Battery Stocks Sold Off

[Asia Economy Reporter Lee Seon-ae] The portfolios of individual investors and foreign investors have sharply diverged. Foreign investors are focusing on selling semiconductors while building portfolios by buying 'growth stocks' such as secondary batteries and biotech, whereas individuals are employing the opposite investment strategy. They are concentrating on buying semiconductors, whose stock prices have plummeted due to foreign investors' overselling. To take advantage of the index correction as a 'buying opportunity at a low price,' they are even borrowing money to purchase semiconductors they judge to be 'overly sold.'

According to the Korea Exchange on the 19th, individual investors have been heavily buying semiconductors since the beginning of this month. This is based on the belief that excessively fallen stocks will recover to their appropriate prices. From the 1st to the 18th, the top net purchase stock by individuals was SK Hynix, followed by Samsung Electronics. The net purchase amounts were 1.7149 trillion KRW and 579 billion KRW, respectively. They also bought Samsung Electronics Preferred shares worth 272 billion KRW. Individuals consider the price drops of Samsung Electronics and SK Hynix to be excessive. Conversely, they sold secondary battery stocks, which they judged to have risen significantly. The top net sold stock was LG Chem, with sales amounting to 569 billion KRW. Samsung SDI and KakaoBank were also net sold by approximately 488.8 billion KRW and 276 billion KRW, respectively. Celltrion (252.7 billion KRW) and Samsung Biologics (236 billion KRW) ranked fifth and sixth in net sales.

On the other hand, foreign investors have been focusing on selling semiconductors this month. During this period, Samsung Electronics was the most sold stock, with sales amounting to 5.5868 trillion KRW. SK Hynix ranked second with sales of 1.8234 trillion KRW. Samsung Electronics Preferred shares, ranked fourth in net sales, were also sold for 174.7 billion KRW. Conversely, growth stocks such as secondary batteries and biotech were actively purchased. The top two net purchased stocks were LG Chem and Samsung SDI, the leaders in secondary batteries, with net purchases of 537.1 billion KRW and 517.1 billion KRW, respectively. They also bought KakaoBank (399.8 billion KRW), Celltrion (162.1 billion KRW), Samsung Biologics (139.8 billion KRW), and SK IE Technology (121.9 billion KRW).

An industry insider said, "The investment performance of individuals and foreigners will ultimately diverge based on the speed of recovery and growth," adding, "This means it depends on how quickly the overly sold semiconductors find their appropriate prices and the growth speed of secondary batteries and biotech."

However, concerns about forced liquidation are rising as individual investors are borrowing money to invest in stocks. Due to individuals' leveraged investing, the credit loan balances for Samsung Electronics and SK Hynix have surged. Samsung Electronics increased by 200.4 billion KRW, and SK Hynix by 171.7 billion KRW.

The scale of leveraged investing has reached an all-time high. According to the Korea Financial Investment Association, as of the 17th, the credit loan balance was recorded at 25.4712 trillion KRW. It has increased for seven consecutive trading days, marking the highest level since records began in 1998. Compared to the beginning of this year (19.3552 trillion KRW), it has surged by about 30%. The credit loan balance represents the amount individual investors borrowed from securities firms to purchase stocks.

As the scale of leveraged investing rapidly grows, warnings about forced liquidation are also increasing. Forced liquidation occurs when the value of stocks purchased on margin (credit transactions) falls below a certain level, or when payment for stocks bought on deferred payment (unsettled transactions) is not made, prompting securities firms to forcibly sell the stocks to recover the loan. Investors who bought stocks on credit expecting price increases face forced liquidation if prices fall and they cannot repay on time. This causes the stock price of the affected stocks to drop, resulting in inevitable losses for investors. As of the 17th, the actual forced liquidation amount compared to unsettled trading receivables was 31.8 billion KRW, more than double the 15.3 billion KRW recorded on the 2nd of this month. The forced liquidation ratio compared to unsettled receivables is 8.2%.

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