Foreigners rake in $5.4 bn in Samsung Elec shares this year on rosy outlook

[Photo by MK DB]

Foreign investors net purchased 7.7 trillion won ($5.8 billion) in South Korean shares this year, the largest amount since the same period in 2012, on growing expectations that the earnings of blue chip stocks including Samsung Electronics Co. will rebound.

According to the Korea Exchange on Monday, foreign investors net purchased 7.7 trillion won in local shares between Jan. 2 and April 221. The amount of purchase exceeded that of sale for the first time since the pandemic and it is the largest amount since 10.4 trillion won during the same period in 2012.

Samsung Electronics was their favorite stock. Foreigners net bought 7.2 trillion won in the shares of the world’s biggest memory chipmaker.

“Offshore investors are flocking to chip stocks,” said Lee Kyung-min, an analyst at Daishin Securities Co. “They expect a turnaround in earnings after the industry bottoms out this year and they also judge the Korean won’s weakening against the U.S. dollar to ease in the second half of this year and next year.”

Foreign investors’ appetite after Samsung Electronics was high for Samsung SDI Co., followed by Hanwha Aerospace Co., LG Electronics Inc., and LG Energy Solution Ltd. (LGES). They sought after blue chip stocks in the chips, automobile, defense, secondary battery, and entertainment sectors whose earnings are projected to improve amid the sluggish environment.

The stocks delivered solid returns of between 20 and 40 percent this year.

Institutional investors, on the other hand, have increased their holding in SK hynix Inc. They net purchased 500.9 billion won worth of the stock between April 1 and 21 while foreigners dumped 352.8 billion won.

Local brokerage houses projected a rosy outlook for the chip industry.

In April, 7 brokerage firms revised up the target price of Samsung Electronics, citing an expected recovery in earnings led by its production cut. HI Investment & Securities Co. was the latest to raise the target price to 83,400 won from 75,000 won.

“The production cut at a larger scale, as announced by Samsung Electronics, could accelerate a recovery in the semiconductor industry,” said Song Myung-sup, an analyst from HI Investment & Securities. “Some of the leading economic indicators that proved to be in alignment with the stock prices of the chip maker have already bounced back.”

Only one securities firm, in the meantime - IBK Securities Co. - raised the target price of SK hynix. Market insiders expected SK hynix to log 3.7 trillion in operating loss for the first quarter.