Selected Divergent Stocks...Retail Investors Cried, Foreigners Smiled

Samsung Electronics, Opposite Supply and Demand
Foreigners Net Buy 2.5 Trillion KRW
Individuals Net Sell 2.6 Trillion KRW
Stock Price Rises 10.3% Amid Mixed Emotions

SK Hynix, Krafton, etc.
Stocks Bought by Foreigners Rise
TIGER China Electric Vehicle, etc.
Stocks Bought by Individuals Fall

Individuals Realize Gains Amid Market Uncertainty
Foreigners Focus on Accumulating Undervalued Stocks

[Asia Economy Reporter Ji-hwan Park] Samsung Electronics, SK Hynix, Krafton, TIGER China Electric Vehicle SOLACTIVE, SK Square, LG Chem, POSCO.

Since November, foreigners have added these stocks to their baskets while individuals sold them, and vice versa. Who is benefiting from these contrasting choices between individuals and foreigners? Based on stock price returns so far, foreigners have a decisive advantage. Stocks heavily bought by foreigners mostly saw price increases, whereas stocks predominantly purchased by individual investors showed sluggish price performance.

According to the Korea Exchange on the 15th, the stock most net purchased by foreign investors in the domestic market from last month until the day before was Samsung Electronics, with a net purchase amount of 2.5082 trillion KRW. During the same period, Samsung Electronics was also the stock most sold by individual investors, with net sales reaching 2.632 trillion KRW. Samsung Electronics’ stock price rose 10.3% during this period.

SK Hynix also showed opposite trading patterns between foreigners and individuals. Foreigners bought 1.2823 trillion KRW worth, while individuals sold 1.9111 trillion KRW worth. SK Hynix ranked second in both foreign net purchases and individual net sales. Its stock price increased by 17.5%. Krafton, with foreigners net buying 725.8 billion KRW and individuals net selling 670 billion KRW, rose 5.0%. For Kakao Games, foreigners net purchased 468.7 billion KRW while individuals net sold 587.8 billion KRW. Since November, its stock price jumped 11.5%.

Conversely, stocks bought by individuals but sold by foreigners experienced declines. Individuals invested 907.6 billion KRW in the exchange-traded fund (ETF) ‘TIGER China Electric Vehicle SOLACTIVE,’ which focuses on Chinese electric vehicle companies, while foreigners sold 180 billion KRW. The stock price slightly dropped by 1.3%.

LG Chem (435.8 billion KRW) and POSCO (306.2 billion KRW) ranked third and fifth respectively in individual net purchases. However, foreigners were net sellers of POSCO and LG Chem stocks, with net sales of 304.6 billion KRW and 239.5 billion KRW, ranking fourth and fifth in foreign net sales. LG Chem and POSCO stock prices fell 16.1% and 2.53%, respectively. New listings also showed mixed results. SK Square, which debuted on the stock market at the end of last month, attracted 440.9 billion KRW in individual buying but saw foreigners sell 370.3 billion KRW. SK Square’s current stock price has dropped more than 20% since its listing.

The recent divergence in supply and demand between foreigners and individuals is analyzed as individuals realizing profits amid increased market uncertainty, while foreigners focus on the undervaluation appeal of the domestic market. Individuals have realized gains as large-cap stocks like Samsung Electronics and SK Hynix, which had underperformed since January this year, have gradually recovered. Currently, the forward 12-month price-to-earnings ratio (PER) based on earnings per share (EPS) for the KOSPI is estimated at 10.3 times, which is low compared to the 30.4 times PER of 23 major advanced market indices including the US, Japan, and the UK.

Lee Woong-chan, a researcher at Hi Investment & Securities, said, "Foreigners expect the domestic market level to rise further due to factors such as the Chinese government’s monetary easing policies, the People’s Bank of China’s reserve requirement ratio cuts, and control over Evergrande Group’s default." He added, "The fact that foreigners switched to net buying in our market from November 11 is likely due to these reasons." He also noted, "Currently, foreign demand should be seen as buying the entire Korean market with undervaluation appeal rather than individual stocks like Samsung Electronics and SK Hynix." Choi Yoo-jun, a researcher at Shinhan Financial Investment, said, "The recent market trend shows foreigners filling the supply gap left by individuals exiting, so an approach focusing on sectors with improved foreign demand is likely to be effective."

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