Foreign investors shift focus to IT, healthcare stocks in Korea

Foreign investors are shifting their focus from battery-related stocks to internet and biotech stocks, generating optimism for a sustained bullish trend in the Korean stock market.

According to the Korea Exchange on Monday, Naver Corp. shares rose 4.92 percent or 11,000 won ($8.4) to close at 234,500 won on Monday. Similarly, Kakao Corp. stocks gained 1.74 percent to close at 52,700 won. This upward movement is attributed to foreign investors, according to Samsung Securities Co., as they purchased a net worth of 18.6 billion won of Naver shares and 13.4 billion won of Kakao shares on that day.

Foreign investors have been actively purchasing internet-related stocks since last month. In the first half of this year, foreign investors net-sold Naver amounting to 498.6 billion won, but their position shifted as they net-bought 77.8 billion won worth of the company’s stocks from July to Monday. They also net-bought Kakao shares worth 251.4 billion won since July, shifting from the earlier trend of net sales totaling 426.3 billion won in the first six months of this year.

The net buying trend among foreign investors has shown a remarkable surge this month. Previously ranked as the fourth most net-purchased Kospi stock by foreign investors last month, Kakao has now claimed the top spot as of Friday. Kakao Bank Corp. also emerged as one of the top three most sought-after stocks among foreign investors.

Foreign money has been flowing out of the secondary battery sector, which has been a stock market favorite this year, and into other sectors such as internet and biotech. The tilt in supply and demand has led to cheap valuations in the sector itself, and analysts believe that strong earnings reports from the biggest names could continue to drive share prices higher.

“Amid the reduction of focus on secondary battery stocks, related companies in the secondary battery value chain, such as LG Energy Solution Ltd., POSCO Future M Co., POSCO Holdings Co., and LG Chem Ltd., all experienced declines,” said Lee Kyung-min of Daishin Securities Co.

The Kosdaq market also witnessed an index-overall decrease following significant drops in stock prices of leading secondary battery-related firms, including EcoPro BM Co., EcoPro Co., and L&F Co. On Monday, the Kospi closed at 2,580.71, marking a 0.85 percent decrease from the previous trading day, while the Kosdaq concluded at 898.22, down 2.2 percent.

The rise in Naver’s stock price is also attributed to its recent robust performance and subsequent target price upwards by securities firms. Industry sources indicate that Mirae Asset Securities Co. set Naver’s target stock price at 290,000 won, NH Investment & Securities Co. at 310,000 won, and DB Financial Investment Co. at 313,000 won. These upgrades were based on the momentum in Naver’s artificial intelligence (AI) business and anticipation for a second-half recovery in the advertising market.

Foreign investors’ net purchases of large-cap healthcare stocks are also on the rise. According to the Korea Exchange, foreign investors net-sold Samsung Biologics Co. shares worth 119.5 billion won in the first half of the year, but they net-purchased 21.3 billion won worth from the previous month up to Monday. SK Bioscience Co. also observed an increase in net purchases by foreign investors during the same period, rising to 49 billion won from 6.8 billion won. The trend of buying internet and healthcare stocks is anticipated to persist for the foreseeable future.

On Monday, funds that had exited the secondary battery sector also appeared to have flowed into companies believed to be associated with room-temperature superconductors. Companies like Duksung Co., Seowon Co., and Power Logics Co. all witnessed surges in their stock prices, closing at the daily limit-up. Duksung is known for its development of commercialized superconducting magnets, while Seowon specializes in producing superconductor material copper.