Selkorea Foreigners Invest in Secondary Batteries

In an 8-Trading-Day Consecutive Selling Streak
4 of the Top 10 Net Purchase Stocks
LG Chem, Samsung SDI, and Other Secondary Battery Stocks
Purchased About 1 Trillion Won Over 10 Days
Attractive Growth Regardless of Economic Cycle

[Asia Economy Reporter Park Jihwan] As foreign investors continue an eight-day consecutive selling streak on the KOSPI, accelerating the 'Sell Korea' trend, certain stocks in the secondary battery sector, KakaoBank, and Samsung Biologics are attracting attention due to concentrated buying.

According to the Korea Exchange on the 20th, foreign investors have maintained an eight-day consecutive selling rally on the KOSPI from the 9th to the 19th of this month. During this period, the net selling amount by foreign investors reached 7.9946 trillion KRW. Even in the early hours of trading on this day, the net selling trend continues.

The primary reason behind foreign investors withdrawing funds from the KOSPI is analyzed to be a preference for safe assets. Lee Jinwoo, head of investment strategy at Meritz Securities, stated, "Recently, tapering (asset purchase reduction) and slowing economic momentum have combined to reduce global risk asset appetite," adding, "Emerging markets and Korea, which are relatively classified as risk assets, seem to be within this influence."

Despite the 'Sell Korea' trend, foreign investors are notably net buying stocks in the secondary battery industry. Among the top 10 stocks with the highest net foreign buying in the domestic market during this period, four were related to secondary batteries. The top was LG Chem, with net foreign purchases amounting to 493 billion KRW. Second was Samsung SDI (297.6 billion KRW), sixth SK IE Technology (112.1 billion KRW), and ninth EcoPro BM (85.5 billion KRW), showing large-scale buying in the secondary battery sector. Foreign investors have net purchased about 1 trillion KRW of these stocks over the past ten days. SK IE Technology and EcoPro BM were also influenced by their inclusion in the MSCI index confirmed this month.

The investment appeal of secondary battery stocks is highlighted by their high growth potential in the mid to long term, regardless of the economic cycle. Lee explained, "The secondary battery sector is expected to sustain battery demand as components for electric vehicles because global automakers' commitment to electric vehicle supply is very strong, regardless of whether the economy is 'good' or 'bad'." He added that battery material companies are not only shielded from economic slowdown issues but also often small in scale, which suggests even higher growth potential.

KakaoBank, which was listed on the KOSPI on the 6th, showed foreign investor net buying dominance except for one day. During this period, foreign investors net purchased a total of 214.1 billion KRW, ranking third in net foreign buying. In KakaoBank's case, the buying trend by foreign investors is analyzed to be driven more by passive fund inflows from exchange-traded funds (ETFs) rather than fundamental strengths. Since the number of tradable shares relative to market capitalization is small after listing, foreign investors tracking the index have no choice but to increase their holdings.

Additionally, Samsung Biologics (137.9 billion KRW, 4th), Naver (122.2 billion KRW, 5th), Celltrion (110.1 billion KRW, 7th), Kakao Games (95.6 billion KRW, 8th), and Kia (58.4 billion KRW, 10th) also ranked high in foreign investor buying. Samsung Biologics is in a favorable position with an earnings surprise in Q2, securing multiple contract manufacturing organization (CMO) orders in the second half, and commercial production of Moderna's COVID-19 vaccine drug product (DP) in Q3, raising performance expectations. Naver has elevated its core business growth level through expanded performance-based advertising and strong shopping trends, with the rapidly growing commerce market each quarter also drawing attention.

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