Foreigners in year's longest Korean buying streak; chipmakers top picks

Foreign investors have returned to the South Korean market, snapping up chip industry leaders such as Samsung Electronics Co. and SK Hynix Inc. for 12 consecutive trading days, the longest buying streak so far this year.

According to the Korea Exchange, foreigners have been net buyers on the main bourse since Sept. 29, purchasing as much as 2.26 trillion won ($1.59 billion) worth of shares.

They focused on semiconductor stocks, with Samsung at the top of their buying list at 897 billion won, followed by SK Hynix worth 805 billion won, Samsung SDI Co. with 184 billion won, LG Energy Solution Ltd. at 159 billion won, and KT&G Corp. at 113 billion won.

Foreign net buying of Samsung and SK Hynix – the world’s two largest memory chipmakers – accounted for 75.3% of total foreign purchases in Korea over the past 12 days.

Analysts said investors are betting on an earlier-than-expected end to the chip industry winter, which previously triggered related shares to fall to their troughs.

END OF CHIP ICE AGE IS COMING

In a recent research note, Morgan Stanley said the end of the chip “ice age” is coming.

The US investment bank said it anticipates a semiconductor cycle recovery in the second half of next year, suggesting bargain-hunting in quality stocks “right now.”

A chip recovery, it said, will also be supported by the falling prices of tech products and logistics, and the reopening of economies, especially in China.

Among Korean chip stocks, Morgan Stanley named SK Hynix as its top pick.

Analysts said Korean semiconductor stocks also stand to benefit from growing geopolitical risks surrounding the US and China.

Investors favor Samsung and SK Hynix over Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest foundry player, amid moves by the Biden administration to tighten rules against Chinese companies.

“Deteriorating relations between China and Taiwan following US House Speaker Nancy Pelosi’s visit to Taiwan and the US ban on chip exports to China will have a greater adverse effect on Taiwanese firms than Korean companies,” said HI Investment & Securities analyst Park Sang-hyun.

Write to Sung-Mi Shim at smshim@hankyung.com
In-Soo Nam edited this article.