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Foreign investors

Korea stocks see $2 bn inflow, stoking hopes for a foreigner comeback

SK Hynix, Samsung SDI top picks; game developers’ stocks also enjoy inflows

By Nov 19, 2021 (Gmt+09:00)

A stock trader in New York
A stock trader in New York

Foreign investors have absorbed $2 billion in South Korean stock markets so far in November, spurring hopes of a foreign comeback, although doubts remained over the sustainability of their purchases.

Some expected foreigners to buy more, saying South Korean shares are low enough to attract investors, while others predicted demand to be limited, given global inflation and declining growth in listed companies’ profit margins.

Foreigners have bought a net 2.4 trillion won ($2 billion) in South Korean stocks, including those listed on the main Kospi and the junior Kosdaq, so far this month, according to Korea Exchange data on Nov. 19.

Overseas investors dumped a net 3.8 trillion won worth of local shares in October, after buying 1 trillion won in September. They were net sellers in the May-August period. Such stock outflows capped the upside in the domestic stocks.

In November, foreigners’ top picks were SK Hynix Inc. and Samsung SDI Co. They purchased a net 603 billion won in SK Hynix as its stock may have hit a bottom, analysts said. Samsung SDI’s stock enjoyed an inflow of 374 billion won on expectations of a surge in its revenue on growing battery demand from electric vehicle makers such as Rivian Automotive Inc. and Lucid Group Inc.

Foreigners also absorbed shares in game developers, having bought a net 336 billion won in Krafton Inc. and a net 259 billion won in Kakao Games Corp.

Analysts have different forecasts on whether foreigners will continue to purchase local stocks until the end of the year.

Some said it is positive for both South Korean and Taiwanese stocks to see inflows.

“Foreign investors turned to net buyers since they saw that concerns over the semiconductor sector’s business conditions have been sufficiently reflected in those markets,” said KTB Investment & Securities Co. analyst Park Seok-hyun.

On the other hand, foreign investors may not continue to increase their South Korean stock purchases, some said.

“Concerns remained over a peak-out of corporate profits next year, so it is premature to hope for further foreign demand,” said Korea Investment & Securities analyst Kim Dae-joon.

Write to Sung-Mi Shim at smshim@hankyung.com

Jongwoo Cheon edited this article.

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