Published : Aug. 16, 2016 - 15:49
Foreign ownership of South Korean stocks grew about 10 percent from a year earlier, the country’s stock market operator announced Tuesday.
According to the Korea Exchange, foreign investors, as of Aug. 10, owned a total of 464.1 trillion won ($424 billion) of shares listed on the benchmark securities trading index Kospi and techy-heavy Kosdaq. Their holdings accounted for 30.6 percent of total market capitalization.
Compared to the end of 2015, the market capitalization held by foreign investors swelled 10.3 percent, while their share of the markets expanded 1.42 percentage points.
Foreigners made a total of 8.87 trillion won net purchases for the past eight months, the KRX data showed. After 2.96 trillion won worth net sales in January, they kept the current buying spree and recorded the largest net purchase volume of 4 trillion won in July.
This year, the most popular Kospi-listed company among foreign investors was AmorePacific. The No.1 cosmetics-maker attracted a total of 951.6 billion won of foreign investment.
On the Kosdaq, pharmaceutical firm Hugel, which produces Botulinum toxin, drew 202.2 billion won worth of foreign investment.
“The recent buying and selling patterns of foreign investors show that they have strong interest in domestically focused shares like cosmetics, apparel, health care and other daily necessities,” said Lee Kyung-min, an analyst at Daishin Securities. “Their focus on the Korean market has been shifting from large-caps to small-caps since July.”
A breakdown by industrial sector showed that foreign investors kept their favor for Korean electronics-makers as their investments in the sector claimed as much as 49 percent of its total market cap.
A noticeable change was a 4.5 percentage point increase in their investment in medical equipment and devices.
The buying trend continued in the steelmaking, chemicals and shipbuilding sectors, too. Foreigners stanched up approximately 2.4 trillion won worth chemical shares and 1.5 trillion won worth steel shares.
However, analysts expressed concerns about quality of the purchases.
“Although the net inflows are on the rise, it is highly likely that the purchases include short-sellers,” Lee said. “Foreign purchases showed strong buying sprees in the shipbuilding and chemicals sectors at least until July, but the growth in the number of actual shares owned by foreigners in these sectors has slowed this month, which is a signal of short-selling practice.”
Indeed, short-selling on Hyundai Merchant Marine stocks, a cash-strapped shipping firm under corporate rehabilitation, sharply increased at the end of July, due to foreign investors’ bets on further falls in the debt-ridden company’s stock value.
According to the KRX, dairy provider Namyang topped the list of Kospi-listed companies with a 92.6 percent stake owned by non-Koreans. On the Kosdaq, Korea Ratings came in first with an 83.3 percent stake.
The current inflows of foreign funds are expected to continue for a time being, analysts say, thanks to the global preference for risky assets, the recent upgrade in Korea’s sovereign rating by Standard & Poor’s and the growing valuation appeals of Korean stocks.
“With the strong appetite for risky assets, the foreign buying spree is forecast to persist for a while,” said Bae Sung-young, an analyst at Hyundai Securities. “Improved Q2 performances of representative industries would help maintain the buying trend.”
By Song Su-hyunv(
song@heraldcorp.com)