[Click eStock] "Foreigners Increasing Turnover Rate... Hold the Bat Shorter"

Recently, as foreign investors participating in the domestic stock market tend to respond by increasing trading turnover rather than setting a clear direction, securities analysts have suggested that it is necessary to consider a short-term investment approach at this point.

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On the 20th, Kang Daeseok, a researcher at Yuanta Securities, said, "Looking at foreign investors' supply and demand, they sell when certain sectors rise and buy when they fall, increasing their quantity at the bottom. This appears to be from the perspective of trading buy (short-term buying)."

Until the previous day, foreign investors recorded a net selling of about 94 billion KRW in KOSPI spot. Researcher Kang explained, "To continue the domestic stock market's resilient rebound, it is necessary for foreign investors' net buying to strengthen again from the supply and demand perspective," adding, "Recently, a sharp appreciation of the Korean won has created expectations for a shift in foreign investors' supply and demand."

What is notable in foreign investors' supply and demand is that despite the shrinking net buying scale, the trading proportion within KOSPI is actually increasing. The trading proportion of foreign investors within KOSPI reached 28.2% this month, the highest since February (28.4%). Researcher Kang stated, "Although net buying data superficially suggests that the influence of foreign investors' supply and demand has weakened, in reality, they maintain influence through active trading."

However, the current situation of foreign investors seems to show weaker directionality compared to trading activity. It is judged that they are focusing a bit more on the possibility of a continued rotation rather than a clear direction in the domestic stock market.

Researcher Kang said, "The characteristic of foreign investors' supply and demand is that they respond to the domestic stock market by increasing trading turnover rather than setting a direction," adding, "this pattern is similarly observed when broken down by sector. Among the last 12 trading days, the sectors with the most net buying on 8 days were defensive sectors such as telecommunications services, healthcare, and consumer staples. Positive attitudes of foreign investors are also confirmed in terms of net buying strength relative to market capitalization and changes in shareholding ratios."

He continued, "Although software and information technology (IT) hardware sectors experienced net selling, their shareholding ratios appear to have increased. In other words, they sold when prices rose and bought when prices fell, increasing their quantity at the bottom," adding, "This is judged to be from the perspective of trading buy rather than being very aggressive. Given the increased difficulty in market response, it is considered a period where investors need to hold the bat short."

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