Foreigners Net Buyers of Domestic Stocks for 7 Months... Continued Optimism for Semiconductor Industry Outlook

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Foreign investors have been net buyers of Korean stocks for seven consecutive months as expectations for the semiconductor industry remain strong and anticipation for the government's value-up program is reflected.

According to the "International Finance and Foreign Exchange Market Trends since May" released by the Bank of Korea on the 12th, the net inflow of foreign investment funds into domestic stocks last month amounted to $1.34 billion.

Foreign investors have been net buyers of Korean stocks for seven months since November last year. The cumulative net inflow of stock investment funds from January to May this year reached $15.18 billion, surpassing the cumulative net inflow of $8.16 billion recorded from January to December last year.

Yoon Seung-wan, head of the Capital Movement Analysis Team at the Bank of Korea's International Department, explained, "With expectations that the global semiconductor market will improve and the strong performance of domestic semiconductor companies, foreign investment funds in Korean stocks have increased. The anticipation of the corporate value-up program has also led to increased investment in stocks with previously low price-to-book ratios (PBR), beyond just semiconductors."

The total foreign securities investment funds, combining stocks and bonds, have been net inflows since November last year. The cumulative net inflow from January to May this year was $21.09 billion, exceeding the $18.87 billion net inflow recorded from January to December last year.

In May, foreign investment funds in domestic stocks increased by $1.34 billion, a decrease in net inflow compared to the previous month ($1.92 billion). Although net inflows continued due to expectations for the global semiconductor industry, the scale of net inflows decreased due to profit-taking sales.

Bond investment funds increased by $2.77 billion, expanding the net inflow compared to the previous month ($2.12 billion). This was because short-term bond investments for arbitrage purposes decreased, but medium- to long-term bond investments continued due to demand for bond forwards and other factors.

The won-dollar exchange rate at the end of May was 1,384.5 won, up 2.5 won from April. However, on the 10th, the won-dollar exchange rate was 1,376 won, down 6 won from April. The exchange rate fell due to a less hawkish-than-expected Federal Open Market Committee (FOMC) meeting in May, but the decline was limited by foreign stock sales in late May and stronger-than-expected U.S. employment data for May.

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