Foreigners Selling Samsung Electronics in Plunging Market, Buying SK Hynix Instead

Consider Price Factors Over Market Outlook
Buying Interest Rises in SK Hynix with Larger Drop from Peak

[Asia Economy Reporter Minwoo Lee] Foreign investors, who had been selling off in record numbers, have started buying SK Hynix again. In contrast, Samsung Electronics continues to experience consistent selling pressure. Analysts suggest that this divergence is less about differences in industry outlook and more about the varying discount levels in stock prices, which influenced the inflow of bottom-fishing buying.

According to the Korea Exchange on the 23rd, SK Hynix was the most purchased stock by foreign investors last week (16th?20th). The net buying volume was 247.8 billion KRW, surpassing second-place KakaoBank (192.9 billion KRW) and third-place LG Chem (130 billion KRW). Although foreign investors had been net sellers from the 4th to the 13th of this month, they began net buying for four consecutive trading days starting on the 16th, signaling capital inflow. On the 18th alone, they purchased stocks worth 107.1 billion KRW. This was the first time since May 13th that foreign investors net bought over 100 billion KRW of SK Hynix in a single day. Consequently, SK Hynix’s stock price rose about 0.99% last week, closing higher, which contrasts with the KOSPI’s 3.49% decline during the same period.

Meanwhile, foreign investors sold off Samsung Electronics stocks worth 1.561 trillion KRW during the same period. This amount is more than ten times the net selling volume of Samsung Electronics Preferred Shares, which stood at 147.7 billion KRW. Compared to Hyundai Motor, the third-largest net sold stock at 67.5 billion KRW, the difference exceeds twentyfold. The stock price trends also diverged. Samsung Electronics fell 2.28% during this period, unlike SK Hynix. On the 20th, Samsung Electronics even hit an intraday low of 72,500 KRW, marking a yearly low.

Since both stocks are leaders in the semiconductor sector, analysts believe the difference stems from price factors rather than industry outlook. Samsung Electronics recorded a recent yearly low of 72,500 KRW on the 20th, while SK Hynix hit 98,900 KRW on the 13th. Comparing these to their respective first-quarter highs, SK Hynix experienced a larger drop. Samsung Electronics fell about 19.4% from its intraday high of 89,900 KRW on January 25th, whereas SK Hynix dropped as much as 34.3% from its intraday high of 150,500 KRW on March 2nd. With a roughly 15 percentage point difference in the decline from peak prices, buying interest concentrated on the relatively cheaper stock.

Lee Hyoseok, a researcher at SK Securities, explained, "It appears that the difference in foreign investor demand is simply due to the difference in price merit." He added, "Robert Kaplan, President of the Federal Reserve Bank of Dallas, who strongly advocated for tapering (asset purchase reduction) last weekend, hinted at a change in opinion due to concerns over the COVID-19 Delta variant. As a result, this week is likely to see a market-wide rebound starting with stocks that have been excessively sold down, i.e., those with cheaper prices."

There is also a view that Samsung Electronics’ demand trend diverged from SK Hynix because it cannot be simply categorized as a semiconductor stock. As a representative stock of the Korean market, foreign investors tend to sell it first when external uncertainties increase. Lee Seungwoo, a researcher at Eugene Investment & Securities, analyzed, "Samsung Electronics is not only a semiconductor leader but also a stock that represents the Korean stock market from the perspective of foreign investors. Due to various external uncertainties such as the slowdown in Chinese economic indicators and the withdrawal of U.S. troops from Afghanistan, safe-haven asset preference has spread, causing Samsung Electronics to be affected first, which may explain the difference in demand compared to SK Hynix."

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