Amid US Tightening Fears, Foreigners and Kia Accumulate... 14 Consecutive Days of 'Net Buying'

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Amid fears of tightening originating from the US, foreign investors have been consistently selling off, but they have been steadily buying Kia. This is because the solid performance in the first quarter has alleviated concerns over the global supply chain that had previously suppressed the stock price.

According to the Korea Exchange on the 13th, foreign investors have made the largest net purchases of Kia (?186.1 billion) so far this month. During this period, foreign investors led the decline in the KOSPI index by net selling ?1.3871 trillion, in contrast. The KOSPI has fallen for eight consecutive days this month, dropping 5.11% to the 2550 level, driven by combined selling from foreign and institutional investors. Meanwhile, Kia rose 3.11%, supported by the buying rally from foreign investors.

Kia showed weakness from the beginning of the year when concerns over tightening by the US Federal Reserve (Fed) intensified, falling to ?68,100 on March 15, marking a 52-week low. This was due to expectations of poor performance as the semiconductor supply shortage, which was a source of instability in global stock markets last year, worsened further due to the Ukraine war. However, as indicators showed a recovery in automobile sales, the stock price began to rise, and from the announcement of the first-quarter earnings on the 26th of last month, active buying by foreign investors appeared. Foreign investors have recorded net purchases for 14 consecutive days up to the previous day.

Kia reported sales of ?18.4 trillion and operating profit of ?1.61 trillion in the first quarter, increases of 10.7% and 49.2% respectively compared to the previous year. In particular, despite increased material costs due to raw material inflation and decreased sales volume, operating profit significantly exceeded market expectations thanks to exchange rate effects and price increases. Considering that the first-quarter results represent the lowest point of the year due to semiconductor supply imbalances, it is expected that production normalization in the future will lead to even higher profit margins.

Junseong Kim, a researcher at Meritz Securities, said, "The semiconductor shortage over the past year and a half has created long waiting demand and extremely low inventory levels. The automobile sector is entering a phase of inventory replenishment along with easing semiconductor supply, and quantitative production increases and qualitative sales improvements are expected. Kia’s production in the second quarter is expected to increase by 70,000 to 80,000 units compared to the previous quarter, which is anticipated to boost operating profit by ?20 to 30 billion, making it a definite alternative in an uncertain market."

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