Foreign investors eye telecommunications, utility stocks

KT Corp. CI

Foreign investors are actively buying telecommunications and utility stocks in South Korea, which are considered defensive stocks that show stable performance even in a volatile environment.

According to the Korea Exchange on Monday, foreigners net purchased 16 billion won ($11.9 million) worth of shares in KT Corp., the fifth-largest among Korean stocks.

They also net bought nearly 4 billion won worth of Korea Electric Power Corp. shares and 3 billion won worth of Korea Gas Corp. shares.

Foreign investors also net purchased 300 million won in LG Uplus Corp. shares on Monday.

Overall, foreigners net sold 450 billion won worth of Korean shares on Monday.

Foreign investors are seen to have purchased defensive stocks as part of efforts to prepare for uncertainty.

The KRX Utilities Index rose by 5.27 percent in the past month and the KOSPI Telecommunications Index also jumped by 4.47 percent.

Defensive stocks, which have outperformed the KOSPI in periods of increased market volatility, are projected to perform well ahead of the Chuseok holiday.

In general, the market tends to become sluggish due to the risk of long-term closures. Defensive and high-dividend stocks such as those of telecommunications stocks have achieved good returns during this period.

Ahead of the Chuseok holiday in 2023, the KOSPI fell by 3.7 percent over the five trading days. In contrast, the KOSPI Telecommunications Index rose by 1.29 percent.

SK telecom, in particular, gained 2.56 percent.