Foreign money returns to Kospi, piling into Samsung
Foreign investors net purchased shares of over 6 trillion won ($4.3 billion) on the benchmark Kospi in July, driven largely by a massive 3.5 trillion won buying spree on the country's leading chipmaker, Samsung Electronics.
Offshore investors bought a net 6.28 trillion won worth of local stocks on the main bourse Kospi in July, according to the data from the bourse operator Korea Exchange. It was the largest amount since the 7.86 trillion won net buying in February 2024.
Since turning to a net buying stance in May, foreign investors have been scooping up shares on the Kospi for three consecutive months.
Samsung Electronics was the top pick, drawing 3.5 trillion won in net foreign purchases, accounting for 56 percent of the monthly total. Giving further buying momentum was news that the company would manufacture AI chips for Tesla under a multiyear $16.5 billion deal, stoking hopes of a rebound in its loss-making foundry business.
Hanwha Ocean followed, buoyed by expectations surrounding the Korea-US trade deal, with offshore investors net purchasing shares worth 858 billion won. The shipbuilder under the defense-to-energy conglomerate Hanwha Group is expected to anchor the Korea-US shipbuilding initiative 'Make American Shipbuilding Great Again.'
Shares of SK Square (457 billion won), Isu Petasys (329 billion won) and Hanwha Aerospace (249 billion won) trailed behind as the next most purchased stocks.
Marking a contrast with the buying rally for Samsung Electronics, offshore investors offloaded 193.1 billion won worth of SK hynix shares last month, following a bearish forecast from global banking giant Goldman Sachs.
Naver was the most sold stock by foreigners during the period, as they dumped 668.2 billion won worth of shares last month.
Major net sold stocks included Doosan Enerbility (243.8 billion won), Samsung SDI (206.8 billion won), Kakao Pay (184.5 billion won) and KB Financial Group (159.8 billion won).
Meanwhile, the Kospi sank to 3,119.41 on Friday, down 3.88 percent from the previous session, marking its sharpest single-day drop in two months.
The stock market was dampened by the government's tax code revision plan and the uncertainty associated with the US tariff talks. On the day, foreign investors offloaded shares worth 656 billion won on the Kospi.
'Investor sentiment weakened as expectations for US rate cuts receded. Foreign investors posted net selling of around 1 trillion won in both the spot and futures markets amid a stronger dollar,' analyst Park Ki-hoon from Korea Investment & Securities explained.
'The market experienced a sharp correction as a series of expectations quickly unraveled amid heightened macro uncertainty both at home and abroad,' said Lee Kyung-min of Daishin Securities.
Despite the Kospi's bullish run in recent months, analysts anticipate a period of elevated volatility in August as the index steps into a phase of valuation correction.
'The conclusion of the Korea-US tariff negotiations, diminished expectations for US rate cuts, and lowered hopes for tax reform are factors weighing on the stock market," said Na Jeong-hwan, an analyst at NH Investment & Securities, projecting the Kospi to trade between 3,000 and 3,300 points this week.
'With a lack of earnings momentum in the domestic market, a short-term correction appears necessary. Volatility is expected to increase in August,' said Kyobo Securities analyst Kim Joon-woo, suggesting the Kospi could inch down to as low as 2,900 points this month.
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