November 26, 2024

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Electronic boards show the Kospi at a dealing room of the Hana Bank headquarters in Seoul on Thursday. (Yonhap)

Foreign investors have returned to the Korean stock market, net buying more than 11 trillion won ($8.29 billion) this year, buoyed by the outlook of a chip recovery.

According to data compiled by the Korea Exchange, non-Korean investors net bought Korean shares worth 11.77 trillion won from Jan. 2 to Thursday, marking a turnaround from massive sell-offs the previous two years.

The buying spree of foreign investors was led by big-name tech giants, including Samsung Electronics and SK hynix, backed by hopes that the global semiconductor industry has neared the bottom of its dip and is set for a rebound in the latter half of this year after a prolonged slump.

Of the nearly 12 trillion won in net buying, some 9 trillion won was for Samsung Electronics, with foreign investors holding 52.21 percent of the company.

Foreigners’ net buying of Samsung Electronics accounted for 86 percent of their total buying on the Kospi this year, hitting a record high since the Korea Exchange started to compile the data since 1998.

Foreign investors are also increasing their stake in SK hynix, net buying shares amounting to 1 trillion won this year.

The buying spree was further bolstered this week by the surging share price of US tech firm Nvidia after it released a favorable quarterly earnings report Wednesday.

Shares of Samsung Electronics closed at 70,300 won on Thursday. It surpassed the 70,000 won bar the day before for the first time in 14 months dating to March 2022, marking a rebound from the low 50,000 won range in September.

Shares of SK hynix closed at 109,200 won on Friday. Similarly, the share price of SK hynix surpassed the 100,000 won mark on Thursday for the first time in 10 months, since July 2022.

“Money move for Samsung Electronics will continue," analyst Kim Dong-won from KB Securities said.

“Samsung Electronics, with sufficient production capability and cash flow, is likely to take the lead of the industry when the downcycle in the chip industry wraps up.”

The market expects foreign investors’ buying spree on the Korean stock market will continue for the time being as the chip industry is set to recover and the US Federal Reserve is projected to have wrapped up its aggressive monetary tightening cycle.

“For foreign investors, the local stock market is on an inflection point after losing its charms in the past two years,” analyst Lee Kyung-min from Daeshin Securities said.

“As the performance of (tech firms) is projected to improve and the weakness of Korean won is likely to cool off throughout the year, foreigners will take the lead in the Kospi market.”

By Im Eun-byel (silverstar@heraldcorp.com)