Foreigners Turned Net Buyers in July... Rebound Magnitude Half That of the US

Foreigners Net Buy 2.32 Trillion Won in One Month
Samsung Electronics Rises 7.72% During This Period

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] As foreign investors shifted to a buying preference this month, the KOSPI showed a rebound for the first time in four months. However, the increase was only about half the rise seen in U.S. indices when compared to major global indices.

◆ KOSPI rises 5% in July... largest gain this year

According to the Korea Exchange on the 31st, foreign investors purchased stocks worth 2.3215 trillion won in the KOSPI market this month. This is the largest net buying since December last year (3.3987 trillion won) and the biggest net purchase so far this year. Foreigners' net buying of KOSPI stocks occurred for the first time in two months since May (128.3 billion won).

Last month, foreigners sold stocks worth 5.5816 trillion won, triggering a decline in the index. Concerns over accelerating tightening by the U.S. Federal Reserve (Fed) amid soaring inflation and the resulting tightening fears caused the won-dollar exchange rate to surge sharply. However, this month, as the won-dollar exchange rate stabilized from the 1,320 won level to the 1,290 won level, foreign buying momentum increased again.

Accordingly, the KOSPI rebounded after four months, closing up 5.1%. In terms of monthly gains, this is the highest since December 2020 (10.89%), just before the KOSPI surpassed the 3,000 mark.

The stock most heavily bought by foreigners was Samsung Electronics. With improved investment sentiment toward semiconductor companies, foreigners purchased Samsung Electronics shares worth 546.1 billion won. During this period, Samsung Electronics' stock price rose 7.72%, from 57,000 won to 61,400 won.

In addition, foreigners bought a large number of top market cap stocks, including LG Energy Solution (467.9 billion won), SK Hynix (267.5 billion won), Hyundai Motor (178.5 billion won), and Samsung SDI (157.9 billion won), in that order.

◆ KOSPI ranks 12th among 20 countries in rise rate... "August rebound needs further observation"

[Image source=Yonhap News]

Although the KOSPI staged a rare rally, it did not rise significantly compared to other countries. Among the major 20 countries' indices, the KOSPI's rise ranked 12th, placing it in the middle tier.

The country with the highest increase was Argentina, rising 38.52%, followed by Australia (9.45%), the United States (9.11%), France (8.87%), India (8.54%), T?rkiye (7.78%), the EU (7.33%), Saudi Arabia (5.48%), Germany (5.48%), Japan (5.34%), Italy (5.22%), and South Korea (5.1%).

The background for the global stock market's mostly upward trend is presumed to be improved corporate earnings and easing concerns over tightening, which attracted bargain buying. Among the three major U.S. indices, the Dow Jones Industrial Average rose 6.7%, the Nasdaq Composite Index increased 12.4%, and the S&P 500 rose 9.11%, all showing significant gains.

Among the 20 countries, China and Russia experienced declines. The Chinese stock market fell more than 7% after news emerged of partial lockdowns restarting due to COVID-19. Russia's market dropped 0.41%.

However, whether the global stock market will continue this upward trend in August remains uncertain. The declines in oil and the dollar, which are barometers of index trends, are not yet significant. The fact that natural gas prices are still rising is also a burden, as Russia's reduced gas supply means winter stockpiles cannot be replenished.

Seonghoon Seo, a researcher at Samsung Securities, said, "It is hard to ignore the recent resurgence of expected inflation," adding, "Unless there is a significant earnings surprise or signs of moderate negotiations among major powers, a strong rebound is unlikely."

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