[Edaily Reporter Kim Kyung-eun ] As the stock prices of SamsungElectronics(005930)and SK hynix(000660)plummeted, the contrasting trading behaviors of foreign and retail investors are drawing attention. While foreign investors have been offloading large-cap semiconductor stocks on a massive scale over the past two months, retail investors have resumed buying amid the recent market downturn. The stocks that foreign investors have purchased as alternatives to large-cap semiconductor stocks are showing relatively favorable price trends, resulting in mixed fortunes for the different investor groups.

◇Foreign Investors Continue to Sell, Retail Investors Resume Buying

According to MP Doctor on the 15th, foreign investors net sold SK hynix shares totaling 24.125 trillion won from August 20—when SK hynix began its share buyback program—through the previous day. During this period, they also sold off 9.2396 trillion won worth of SamsungElectronics shares. The total net selling by foreign investors in these two stocks amounted to 33.3646 trillion won. During the same period, retail investors also net sold a combined 15.9084 trillion won worth of these two stocks—5.3540 trillion won worth of SamsungElectronics and 10.5544 trillion won worth of SK hynix.

However, recently, the trading trends of foreign investors and retail investors have diverged. Since the start of this month, retail investors have made net purchases of 3.3273 trillion won worth of SamsungElectronics and 1.4920 trillion won worth of SK hynix. This amounts to a combined net purchase of 4.8193 trillion won for the two stocks. In particular, retail investors made net purchases of over 7.5 trillion won worth of the two stocks between the 6th and 14th of this month. This is interpreted as retail investors taking advantage of the market’s decline to buy at lower prices, as the KOSPI turned downward on the 6th and continued its downward trend for six consecutive trading days.

Foreign investors have net sold 3.3666 trillion won worth of SamsungElectronics and 8.1731 trillion won worth of SK hynix so far this month. The total net selling volume for these two stocks amounts to 11.5397 trillion won. Unlike retail investors, who viewed the stock price decline as an opportunity to buy at a low price, foreign investors appear to have continued selling large-cap semiconductor stocks and shifted their investments to other stocks.

In fact, from August 20 to October 14, the top stocks by foreign net buying on the KOSPI market were WooriFinancialGroup (947.4 billion won), KoreanAirLines (433.1 billion won), and SK Innovation (318.6 billion won), in that order. GS Holdings (206.5 billion won), DaeduckElectronics (168.2 billion won), SAMSUNG SDS CO., LTD. (157.2 billion won), and KOREA INVESTMENT HOLDINGS (153.9 billion won) also ranked among the top net buyers.

Even this month, foreign capital has flowed into stocks other than large-cap semiconductor stocks. From the 1st to the 14th, foreign investors made net purchases of 538.8 billion won in WooriFinancialGroup. In addition, they heavily bought SamsungElectroMechanics (176.8 billion won), ISUPETASYS (151.2 billion won), DB HiTek Co.,LTD (82.2 billion won), and HMM (79.8 billion won).

The stocks purchased by foreign investors showed relatively strong price performance. From August 20 to the 14th of this month, while the share prices of SamsungElectronics and SK hynix fell by 14.39% and 16.09%, respectively, KoreanAirLines rose by 20.36% and SK Innovation by 29.63%. WooriFinancialGroup, the top net foreign buyer, also saw its stock price fall by only 1.74%. While the stock prices of stocks with net foreign buying held up relatively well, the large-cap semiconductor stocks that retail investors have recently been buying heavily continued their downward trend.

◇Foreign Capital Flow Recovery to Be Tested Starting in Late October

As foreign selling pressure persists, the supply-demand gap in the domestic stock market is widening. The foreign ownership ratio of SamsungElectronics has fallen to its lowest level in 18 years—since 2008—and SK hynix’s foreign ownership ratio is also below its 10-year average.

The securities industry views the earnings announcements by SamsungElectronics and SK hynix at the end of this month as the first turning point for a recovery in foreign investor sentiment. Analysts suggest that foreign investor sentiment could shift depending on the semiconductor supply and demand outlook for both companies, assessments of the technological catch-up by China’s Changxin Memory Technology (CXMT), and whether additional shareholder return measures are announced. Other key variables include the U.S. midterm elections on November 3 and the Anthropic IPO in mid-November.

Kim Jae-seung, an analyst at HYUNDAI MOTOR SECURITIES, said, “There are no major events on the horizon that would immediately reverse foreign investors’ net selling,” but added, “As the market processes these events—including the earnings announcements in late October, the U.S. midterm elections in early November, and the Anthropic IPO in mid-November—foreign investors’ net buying is expected to gradually return.”