Q1 Investment Report Card... Individuals Cry After Pouring 15 Trillion Won, Foreigners Smile Shouting SelKorea

Investment Report Card: Foreigners > Institutions > Individuals... Lowest Returns Despite Aggressive Net Buying

[Asia Economy Reporters Seon-ae Lee and Myunghwan Lee] In the first quarter of this year, foreign and institutional investors consistently sold stocks in the domestic market, while individual investors absorbed all their shares, showing relentless buying momentum. However, the investment performance boasting aggressive net purchases in the first quarter is not good. It is virtually the worst. Despite struggling to defend the slipping stock market throughout the first quarter due to various factors, individual investors lagged behind foreigners who called for ‘Sell Korea’.

According to the Korea Exchange on the 31st, from the first trading day of the year on January 3 to the 29th, individuals purchased stocks worth 15.132 trillion KRW, while foreigners and institutions sold stocks worth 8.242 trillion KRW and 6.876 trillion KRW, respectively. While foreigners and institutions consistently sold, individuals alone aggressively bought. The buying intensity ranks as individuals > institutions > foreigners. However, when estimating investment returns by calculating the average purchase price (dividing net purchase amount by net purchase quantity) for the top 10 net purchase stocks of each group and comparing it with the current price (closing price on the 29th), the investment performance ranks foreigners > institutions > individuals.

The average return based on the top 10 net purchase stocks is estimated at -1.12% for individuals and -0.92% for institutions, while only foreigners are estimated to have made a profit (0.07%). Foreigners also had more profitable stocks in their portfolios. Seven out of the top 10 stocks in foreigners’ and institutions’ portfolios yielded profits, whereas individuals saw profits in only four stocks.

The stock with the largest loss for individuals was Krafton. The average purchase price for Krafton was 342,695 KRW, but the price dropped to 273,000 KRW on the 29th, resulting in a loss rate of 20.34%. Samsung Electronics, the top net purchase stock, is a ‘love-hate’ target for individuals. The stock price fell back to the ‘60,000 KRW level’ in the first quarter, and recovery remains distant. It is interpreted that individuals continuously averaged down their purchase price by buying more Samsung Electronics shares, but the return is still negative (-1.35%). Other stocks such as Kia (-2.96%), Samsung SDI (-2.13%), and Samsung Electro-Mechanics (-1.50%) also showed poor performance. Although net purchases were centered on large-cap stocks, they seemed to have collapsed helplessly amid the market decline.

Institutions are interpreted to have lagged behind foreigners by heavily investing in SK Innovation and LG Energy Solution. SK Innovation, the fourth most purchased stock, recorded the highest loss rate at -46.75%. LG Energy Solution, the most purchased stock, also showed a negative return of -12.11%. However, profits were made in stocks such as Korea Aerospace Industries (14.94%), KT (13.15%), Hyundai Marine & Fire Insurance (10.00%), and L&F (7.67%).

Foreigners, who sold about 8 trillion KRW and reduced the market capitalization weight of KOSPI stocks to the lowest level in six years in the first quarter, achieved the most respectable performance. They responded to the market by buying defensive financial stocks, and this investment strategy paid off. Woori Financial Group (5.28%), Hana Financial Group (3.35%), and Shinhan Financial Group (2.60%) all yielded profits. Preemptive investments in stocks likely to be newly included in the May Morgan Stanley Capital International (MSCI) index rebalancing, such as Hyundai Heavy Industries (9.86%) and KT (8.03%), were also successful. Notably, KT’s stock price rise stood out in the telecommunications sector, considered a stable industry that can profit amid tightening monetary policy and slowing economic growth. KT recently hit a 7.5-year high, repeatedly setting 52-week highs and recovering a market capitalization of 9 trillion KRW.

As a result, there is talk that setting investment strategies based on foreigners’ trading trends could be one approach. An Jin-cheol, a researcher at Korea Asset Investment Securities who forecasted that KOSPI could reach 4,000 in the second quarter, compared the top net purchase stocks of individuals and foreigners and emphasized, “Following only the stocks foreigners buy will not result in losses.” He analyzed, “Only two of the top 10 stocks foreigners bought have declined in price compared to the beginning of the year, whereas nine of the top 10 stocks bought by individuals have fallen.”

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