US Funds Have Returned... "Foreign Demand Positive"

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] U.S.-based funds have returned. The "Buy Korea" phenomenon from the United States, the country holding the largest amount of domestic stocks, is seen as positive in foreign investor demand.

According to the Korea Exchange on the 18th, foreigners have net purchased domestic stocks worth 3.8437 trillion KRW since last month. After turning to net buying by purchasing stocks worth 1.8108 trillion KRW last month, they also net bought stocks worth 2.0328 trillion KRW this month. The U.S. net purchased stocks worth 1.7 trillion KRW last month, followed by Singapore with 400 billion KRW. Among foreigners, the country holding the largest share of Korean stocks is the U.S. at 41.2%, followed by the U.K. (8.1%) and Singapore (6.6%). U.S.-based funds mainly flow in through funds and have a strong long-term investment tendency favoring buying at market bottoms.

During this period, the stock most purchased by foreigners was LG Energy Solution, with net purchases worth 895.8 billion KRW. This was followed by Samsung SDI (539 billion KRW), Hyundai Motor (450.4 billion KRW), SK Hynix (377.2 billion KRW), and Samsung Electronics (361.9 billion KRW), focusing on large-cap stocks. LG Energy Solution hit its yearly low at 352,000 KRW on the 4th of last month but recovered to the 470,000 KRW range by August 11. Samsung SDI recorded a 24.31% return from the 4th of last month to the day before, and the other stocks also showed gains of over 5%. The KOSPI index fell to the 2200 level in June but rebounded to recover the 2500 level this month, driven by foreign buying.

Since early this year, foreign investors have withdrawn funds from emerging market equity funds sensitive to risk due to the Russian invasion of Ukraine and the U.S. Federal Reserve's aggressive interest rate hikes, which significantly contracted global financial markets. However, since June, with expectations of inflation peaking, funds have flowed into emerging market equity funds and exchange-traded funds (ETFs) starting last month. Kim Hoo-jung, a researcher at Yuanta Securities, said, "Investment sentiment toward risk assets in the global fund market appears to be recovering," adding, "U.S.-based funds have net purchased domestic stocks worth about 1.799 trillion KRW this year, increasing the proportion of Korean stocks undervalued in emerging market equity funds." He added, "The return of U.S.-based funds is a positive signal for foreign demand in Korea."

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