Korea retailers spend over 40% of their '20 stock invest in Jan., mostly on Samsung Elec

Retailers, the force behind Korean stock milestones since last year, stand firm with even bolder spending, net buying 25.6 trillion won ($23 billion) in January alone - or 40.5 percent of their 63.8 trillion won full-year record in 2020 -, of which nearly half went to Samsung Electronics despite negative returns.

Individual investors net purchased 10.16 trillion won worth Samsung Electronics shares last month, already exceeding their total 9.6 trillion won investment in the bellwether blue chip for whole 2020. The net purchase amount in Samsung Electronics shares accounted for 42.2 percent of their total net purchases of 24.04 trillion won in the main Kospi market in January even as they went on losing money.

In January, the average retail buying price of Samsung Electronics shares was 87,001 won per share – higher than the closing price of 82,000 won on Friday – leading to a minus return of 5.7 percent.

The return on investment by retailers in top 10 blue chip stocks was all negative in January.

Individual net bought 25.9 trillion won in stocks in January – 22.3 trillion won in the main Kospi and 3.5 trillion won in the secondary Kosdaq.

The Kospi has gained 3.58 percent so far this year, outperforming the mild gains of 0.83 percent in the U.S. S&P 500 index and 0.3 percent in the Shanghai Composite Index.

Institutions net sold 17.38 trillion won worth of shares in the main Kospi and foreign investors 5.2 trillion won in January.

The Korean market is not expected to experience heavy fluctuations despite the heavy retail involvement since individuals have been putting money in large-cap stocks instead of high-risk and high-return equities to suggest longer-term investment.

Lee Kyung-min, a researcher at Daishin Securities, noted retailers’ net buying is focused on blue chip stocks, which means investment for longer-term parking than immediate returns.

Samsung Electronics was the retailers’ most favored stock in January, with the total amounting to 12.06 trillion won when adding Samsung preferred shares.

Analysts expect only limited correction in chip stocks including Samsung Electronics because a recovery in global chip demand is expected to be sustained for a while. They also believe Samsung Electronics’ recent decision to pay higher dividends - from 9.6 trillion won to 9.8 trillion won for annual dividend payout - will continue to attract investors.

They believe small investors would recoup their current losses in Samsung Electronics, given its dividend ratio of 3.65 percent based on last year’s annual dividend total.

Choi Do-yeon, a researcher at Shinhan Investment, said that DRAM prices in the January-March period are expected to pick up quickly as well as NAND shipments, signaling recovery in the semiconductor industry.

The second most-loved stock by retailers after Samsung Electronics in January was Hyundai Mobis (1.07 trillion won), Hyundai Motor (940.9 billion won), and SK Hynix (918.9 billion won) – all dominant players that have been engaged in large-scale investment in future growth industries such as electric vehicles.

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