Why Foreigners Net Bought Over 2 Trillion Won This Month Alone

US-China Conflict Negatively Impacts Taiwan
Semiconductor Companies Expected to Gain
Strong Dollar Increases Price Attractiveness
Fundamental Concerns Remain

[Asia Economy Reporter Kwon Jaehee] Since October, foreign investors have net purchased over 2 trillion KRW in the Korean stock market. This foreign demand appears to be reducing downward pressure on the index. The semiconductor sector in Korea has gained attention amid US-China tensions, leading to expected spillover benefits, while the strong dollar has increased the price attractiveness of the Korean stock market. However, concerns about the fundamentals of Korean companies remain, which could act as a hurdle to the continued net buying by foreign investors.

According to the Korea Exchange on the 28th, foreign investors net purchased 2.9477 trillion KRW worth of stocks in the Korean market during October (from the 4th to the 27th). Over 17 trading days, foreign investors maintained a buying rally every day except for one day, the 20th, when they sold 75.4 billion KRW.

This scale of net buying by foreign investors is the second largest this year after August (approximately 3.8 trillion KRW). Except for February, May, July, August, and October, foreign investors had taken net selling positions every month, averaging about 3.6 trillion KRW in monthly sales.

The stock most heavily purchased by foreign investors this month was Samsung Electronics, the leader of the KOSPI. During this period, foreign investors scooped up 1.406 trillion KRW worth of Samsung Electronics shares. Next, they net purchased SK Hynix with a total of 865 billion KRW. The focus on major domestic semiconductor stocks by foreign investors is attributed to growing negative sentiment toward Taiwanese companies. Recently, the US government announced semiconductor export restrictions to China, highlighting Taiwan’s geopolitical risks, and Taiwan’s leading semiconductor company TSMC postponed its 3-nanometer mass production once again, allowing Korean semiconductor companies like Samsung Electronics to benefit.

Park Sanghyun, a researcher at Hi Investment & Securities, analyzed, "Since US House Speaker Nancy Pelosi’s visit to Taiwan, cross-strait relations have worsened, and concerns about US semiconductor export regulations to China have increased. This seems to have triggered a sentiment that could negatively impact Taiwanese semiconductor companies."

Following semiconductors, foreign investors also purchased secondary battery-related stocks such as Samsung SDI (638.2 billion KRW) and LG Energy Solution (374.1 billion KRW). Additionally, defensive stocks like KT&G (169.3 billion KRW) were also acquired.

The strong dollar phenomenon has lowered the price burden of stocks listed on the domestic market, which is also believed to have stimulated foreign investors’ buying sentiment. The dollar-denominated KOSPI index has fallen below the 1,200 level, roughly half of its peak in June last year (2,225 points).

Shin Jungho, a researcher at eBest Investment & Securities, stated, "Since 2010, foreign investors have switched to buying positions whenever the dollar-denominated KOSPI fell below 1,200 points. From the perspective of foreign investors, Korean stocks have sufficient price merit."

While the dominant view is that foreign investors’ net buying streak will continue for the time being from a supply-demand perspective, concerns remain that weakening fundamentals of Korean companies could pose an obstacle. Lee Kyungmin, head of investment strategy at Daishin Securities, analyzed, "Corporate fundamentals are deteriorating faster than expected, so risk management by foreign investors is also necessary at this point."

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