Kakao Group stocks gain on foreign, institutional net buying

[Photo by Yonhap]

A buying trend has been evident for South Korea’s platform giant Kakao Corp. on the back of the latest record highs of the country’s benchmark Kospi.

According to the Korea Exchange on Tuesday, shares of Kakao rose by 7.02 percent from the previous session. The trading volume for the platform stock soared by 218 percent. On the same day, shares of Kakao’s major units also gained, such as Kakao Bank (14.04 percent) and Kakao Pay at (7.97 percent).

The recovery has been led by foreign and institutional net buying.

Throughout this year, foreigners dumped 229 billion won ($177.9 million) worth of Kakao shares and institutional investors 70.6 billion won.

In July, however, foreigners and institutions net purchased 197 billion won and 38.5 billion won in Kakao shares, respectively.

The turnaround is attributed to growing expectations about improved earnings for Kakao amid signs of a soft landing for the global economy.

According to financial data tracker FnGuide Inc., Kakao is projected to post 2.07 trillion won in sales and 124.4 billion won in operating profit for the second quarter. The forecast represents a rise of 13 percent in sales but a decline of 27 percent in operating profit.

Market insiders expect the operating profit to rise by 6.5 percent on year in the third quarter and 87 percent in the fourth quarter on the back of the signs of recovery in the ad industry.

Kakao draws significant attention from the market due to its emphasis on artificial intelligence (AI) and mergers and acquisitions (M&A). Anticipated for the second half of this year, the launch of ‘KoGPT 2.0,’ an integration of KakaoTalk and AI, is expected to serve as a catalyst for stock price growth.

In a separate announcement on the same day, Kakao Pay said its operating loss of 12.5 billion won continued into the second quarter. However, the digital wallet company has shown impressive growth in its payments segment.

Kakao Bank is projected to post 515 billion won in operating revenue and 102.2 billion won in operating profit, marking a remarkable 75 percent and 37 percent year-on-year surge, respectively.

On the other hand, Kakao Games is expected to see a 57 percent on-year decline in its operating profit for the second quarter.

Kakao Bank and Kakao Games are scheduled to announce their second-quarter earnings on Wednesday, while Kakao’s earnings report is expected on Thursday.