Why Did Securities Firms That Raised Samsung Electronics' Target Price Take a 'Sell' Stance?

Institutional Investors Net Sold Nearly 5 Trillion Won This Year
Financial Investment (Securities Firms) Samsung Electronics Net Sold 1.4 Trillion Won, Largest
Arbitrage Program Trading and Dividend Drop May Trigger Sales

[Asia Economy Reporter Ji Yeon-jin] Institutional investors, who have continued a 'selling' trend this year, were found to have sold Samsung Electronics the most. This contrasts with securities firms, which have been raising Samsung Electronics' target price one after another since the end of last year, expecting an improvement in the semiconductor industry.

According to the Korea Exchange on the 10th, institutional investors have net sold domestic stocks worth 4.7247 trillion KRW as of the 7th of this year. Securities firms' financial investment led the selling trend with net sales of 1.1495 trillion KRW. Following were pension funds and private equity funds, which net sold 186.8 billion KRW and 104.3 billion KRW respectively.

The stock most net sold by institutions was Samsung Electronics, amounting to 1.1495 trillion KRW. Net selling by institutions was also concentrated in top KOSPI market capitalization stocks such as SK Hynix (301.7 billion KRW), NAVER (111.5 billion KRW), Hyundai Motor (107.4 billion KRW), and Kakao (106.7 billion KRW).

The financial investment industry interprets the selling of Samsung Electronics as influenced by mechanical program trading for arbitrage. Program trading is an automatic transaction executed by computer programs based on pre-determined conditions. Lee Jin-woo, a researcher at Meritz Securities, said, "Financial investment classifies securities firms' arbitrage or derivative transactions, and when there is selling pressure, automatic selling such as arbitrage occurs," adding, "In the case of Samsung Electronics, funds that flowed in for dividends at the end of last year appear to be flowing out at the beginning of this year."

Since the end of last year, Samsung Electronics' stock price has risen as foreign investors continued buying amid growing expectations of industry improvement rather than concerns of 'peak-out' (decline after economic peak). Securities firms have been raising their target prices one after another this year. On the 5th, Hanwha Investment & Securities (110,000 KRW) and Korea Investment & Securities (105,000 KRW) raised their target prices, followed by Shinhan Financial Investment (105,000 KRW), Hi Investment & Securities (94,000 KRW), and Kiwoom Securities (95,000 KRW) on the same day, raising earnings estimates and target prices. This came after Samsung Electronics announced its provisional results for last year, which were at an all-time high, on the 7th.

Kim Kyung-min, a researcher at Hana Financial Investment, said, "Due to the burden from the rise in the US 10-year nominal interest rate, only earnings can defend stock prices in the semiconductor sector, whether in the US or Korea," adding, "If foreign investors recognize and understand this change, it is expected that the stock prices of the entire memory semiconductor supply sector will level up."

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