As the 'King Dollar' Falters... Foreigners' First Net Purchase This Month, Samsung Electronics Soars 4%

USD Exchange Rate Declines for 2 Consecutive Trading Days
Foreigners Record Net Buying for Two Months Straight

1.5 Trillion Won Net Selling This Month...Samsung Electronics Sold 1 Trillion Won
Samsung Electronics Hits New 7-Day Low Then Strong Rebound on Same Day

[Asia Economy Reporters Ji Yeon-jin and Kwon Jae-hee] On the 13th, the domestic stock market rebounded strongly. This was thanks to the won-dollar exchange rate, which had been pressuring the stock market, falling to the low 1370 won range, stimulating risk asset investment sentiment. Foreign investors, who showed a selling preference in the early session, switched to net buying during the session. This is the first net buying this month.

According to the Korea Exchange, foreign investors have been net sellers of domestic stocks for six consecutive trading days this month. The selling volume reached 1.5806 trillion won. During this period, foreign investors concentrated their selling on Samsung Electronics, net selling 1.0342 trillion won worth. As a result, Samsung Electronics fell to 55,600 won on the 8th, marking a 52-week low.

The rebound in the domestic stock market on this day appears to be due to the weakening of the dollar's strength, which led foreign investors to buy Samsung Electronics at low prices. Foreign investors actively bought Samsung Electronics from the early session, and Samsung Electronics showed an intraday surge of over 4%.

According to the Financial Supervisory Service's announcement of the 'August 2022 Foreign Securities Investment Trends' on this day, foreign investors net purchased 3.948 trillion won of domestic listed stocks last month. Foreign investors, who net purchased domestic stocks for the first time this year in July, further expanded their net buying last month. Since the won-dollar exchange rate surpassed 1300 won from July, marking the start of the dollar's strength, they bought large-cap stocks such as LG Energy Solution, Hyundai Motor, Samsung SDI, Samsung Electronics, and SK Hynix, which have a large export ratio.

However, with the growing possibility of an economic recession in Europe, which is experiencing an energy crisis this month, the dollar's value soared further, fueling foreign investors' selling pressure. Typically, foreign investors show a selling preference when the dollar is strong, due to the release of stocks aiming for exchange gains and a strong preference for the dollar as a safe asset. The won-dollar exchange rate surpassed 1388 won intraday for the first time in 13 years and 5 months since the financial crisis (April 2009), earning the nickname 'King Dollar.'

The won-dollar exchange rate closed at 1380 won on the 7th and started at 1375.0 won on this day, down 5.8 won from the previous trading day, marking a decline for two consecutive trading days. This reflects expectations of an inflation 'peak out' as the U.S. Consumer Price Index (CPI) for August, scheduled to be announced this week, is expected to fall by 0.1% compared to the previous month.

However, the foreign investors' selling pressure on domestic stocks remains volatile, largely due to continuous sales of Samsung Electronics shares since the beginning of this year. Foreign investors have net sold 15.561 trillion won of domestic stocks this year through the 8th, with Samsung Electronics accounting for about 60% (9.3878 trillion won) of that amount. The market expects Samsung Electronics' third-quarter sales to increase by 3% from the previous quarter to 79.1 trillion won, while operating profit is expected to decrease by 10% to 12.7 trillion won. Although sales improvement is expected due to the weak won, demand in the semiconductor sector is declining, and the drop in shipment volume and prices is expected to be larger than anticipated, which could impact earnings.

Nam Dae-jong, a researcher at Ebest Investment & Securities, said, "Since uncertainty in the business environment is still expanding, it is appropriate to explore the bottom for the time being rather than actively buying." Choi Do-hyun, a researcher at Shinhan Financial Investment, said, "The trend rally of large semiconductor stocks is expected to start as early as early next year, and the earnings rebound is expected around mid-2023."

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