Foreign buying of Korean shares soars to new record in H1

Top purchases are: Samsung Electronics, SK hynix, Hyundai Motor, Samsung C&T

Electronic board at a dealing room of the Hana Bank headquarters in Seoul shows the Kospi closing at 2,797.82 on Friday, up 13.76 points or 0.49 percent from the previous trading day. (Yonhap)

Foreign investors’ net purchases on the South Korean stock market during the first six months of this year surged to an all-time high of over 23 trillion won ($16.6 billion), according to the nation's sole bourse operator, the Korea Exchange, on Sunday.

Overseas investors amassed a total of 23.28 trillion won worth of local shares in the first half of this year, the highest since the Korea Exchange began compiling related data in 1998. The previous high was set at 12.23 trillion won in the same period of 2004.

Net purchases for the benchmark Kospi amounted to 22.42 trillion won, along with an additional 606 billion won for the secondary tech-laden Kosdaq.

Foreign investors sustained a four-month buying streak this year, scooping up 2.95 trillion won in January, 8.24 trillion won in February, 5.11 trillion won in March and 2.41 trillion won in April. After shedding shares worth 954 billion won in May, foreign investors turned to net buying again in June, racking up 5.23 trillion won.

The market bellwether Samsung Electronics was the most bought stock for offshore investors as they racked up shares worth 7.97 trillion won, followed by SK hynix at 3.8 trillion won, Hyundai Motor Company at 3.45 trillion won, Samsung C&T, the construction and energy arm and de facto holding unit of Samsung Group, at 1.32 trillion won.

They also net purchased over 1 trillion won worth of preferred shares of Samsung Electronics, HD Hyundai Electric and Kia. Biotechnology company Alteogen, together with KB Financial Group and Krafton, the game developer, also made it to the top 10 bought share list.

The top 10 shares experienced an average price surge of 70.9 percent in the first half of this year, during which Kospi inched up 5.4 percent.

Meanwhile, retail investors net sold shares worth 7.39 trillion won in the same period, the highest ever. The previous record was set at 4.21 trillion won in 2005. They net bought shares worth 6 trillion won on Kosdaq, but dumped stocks worth 13.48 trillion won on Kospi.

The most sold stock for retail investors in the first half of this year was Hyundai Motor Company at 3.97 trillion won, followed by Samsung Electronics at 3.46 trillion won and SK hynix at 1.23 trillion won, preferred shares of Samsung Electronics at 1.13 trillion won, Kia at 1.11 trillion won.

"Foreign investors are likely to continue the net buying streak as Korea's export increase has been steady," analyst Lee Jae-man from Hana Securities viewed.

But Lee added the strong US dollar has to weaken for Kospi to further recover.

"The weakening of the US dollar can only come when the Federal Reserve decides to cut its base interest rate," Lee said, hinting the cut to come in September.

By Im Eun-byel(silverstar@heraldcorp.com)