Foreign investors have extended their buying streak, acquiring a net purchase of 14.401 trillion won in the Korean stock market so far this year, according to the Korea Exchange. This figure far exceeds last year’s total net purchases of 11.424 trillion won.
Despite the Kospi closing at 2748.56 in March 22, down 0.23% from the previous day, foreign investors net purchased 664.9 billion won worth of stocks. This purchase raised foreigners’ share of the Kospi to 34.1%, marking the highest rate in two years and two months since Jan. 26, 2022.
Samsung Electronics led as the most purchased stock in local stocks, with net purchases of 3.54 trillion won, followed by Hyundai Motor (2.208 trillion won) and SK hynix (1.364 trillion won). Foreign investors demonstrated consistent interest in Korean financial stocks, as evidenced by KB Financial Group, Woori Financial Group, and Samsung Life Insurance ranking among the top ten in terms of net purchases.
The rising buying trend among foreign investors can be attributed to three primary reasons. Firstly, with the U.S. Federal Reserve reaffirming its plan to cut interest rates three times this year, Korean stocks have become increasingly appealing as an alternative investment option. China and South Korea are the only two major stock markets that have not seen record highs this year. Given the uncertainty surrounding the US-China conflict, China’s market volatility makes the Korean market relatively more attractive to foreign investors.
The anticipated boom in artificial intelligence (AI) is poised to enhance the performance of domestic semiconductor companies such as Samsung Electronics and SK hynix. Additionally, in the event of South Korea’s won strengthening further, foreign investors will also benefit from favorable exchange rates. “Interest in the domestic semiconductor memory companies will continue, with projections of increased sales and profits,” Kim Seok-hwan, a researcher at Mirae Asset Securities, said.
The South Korean government’s “value-up program” aimed at resolving the country’s chronic undervaluation of stock prices also attracts foreign funds. “Having learned from the success of Japan’s stimulus measures, foreigners believe Korea’s well-crafted shareholder return policies will contribute to rising stock prices,” an official from the Private Wealth Management Center at Hanyang Securities said, explaining why foreigners are aggressively investing in Korea, mainly focusing on blue-chip stocks such as Samsung Electronics and Hyundai Motor.
