by Song Hwajung
Published 26 Apr.2020 08:00(KST)
[Asia Economy Reporter Song Hwajeong] Foreign investors have continued their 'selling' trend in the domestic stock market for 11 consecutive weeks.
According to the Korea Exchange on the 24th, foreign investors net sold approximately 1.648 trillion KRW in the domestic stock market during the week from the 20th to the 24th. They sold 1.3983 trillion KRW in the KOSPI market and 249.5 billion KRW in the KOSDAQ market.
The stock most purchased by foreign investors last week was Samsung Biologics. Foreign investors net bought Samsung Biologics for 64.4 billion KRW last week. This was followed by LG Household & Health Care, which they bought for 54.7 billion KRW. Other net purchases included Celltrion (35.9 billion KRW), Kakao (32.0 billion KRW), Hyundai Mobis (29.5 billion KRW), NCSoft (20.2 billion KRW), NAVER (18.1 billion KRW), Hanjin KAL (14.8 billion KRW), Nongshim (11.1 billion KRW), and NHN Korea Cyber Payment (10.3 billion KRW).
The stock most sold by foreign investors last week was Hyundai Motor. Foreign investors net sold Hyundai Motor for 275.7 billion KRW last week. This was followed by Samsung Electronics, which they sold for 225.8 billion KRW. Other top net sales included SK Hynix (192.9 billion KRW), LG Chem (72.7 billion KRW), Medytox (59.2 billion KRW), KB Financial Group (51.0 billion KRW), Samsung Electronics Preferred (44.2 billion KRW), Shinhan Financial Group (44.1 billion KRW), Samsung Electro-Mechanics (39.2 billion KRW), and KT&G (35.0 billion KRW).
To gauge the timing of foreign investors' shift to buying, attention should be paid to the volatility indices of the US and Korea. When the stock market declines, the demand for options to hedge increases, causing the volatility indices to rise. Hyunguk Ahn, a researcher at Hanwha Investment & Securities, said, "It is noteworthy that the period when foreign selling began in earnest coincides with the period when the US (VIX) and Korean (VKOSPI) volatility indices surged," adding, "This indicates that investors sold their overseas stocks when the volatility in their respective markets was high." Ahn also said, "Since April 2009, when both volatility indices began to be calculated, looking at the cumulative net purchases by foreigners, there is a strong tendency for foreign net selling when the US volatility index is more than 3 percentage points higher than Korea's, and net buying mainly occurs when the difference between the two indices is small," adding, "If the US volatility index falls to around 30%, similar to Korea's, we can expect a shift to foreign buying."
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