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Are foreign investors returning to KOSPI?

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Hana Bank dealers work in a trading room in Seoul, Tuesday. Yonhap
Hana Bank dealers work in a trading room in Seoul, Tuesday. Yonhap

By Lee Min-hyung

Foreign investors have gone on a buying spree of Korean shares for the past two months on growing hopes for a gradual end to the ongoing cycle of monetary tightening.

According to data from the Korea Exchange, foreign nationals purchased Korean shares worth 6.07 trillion won between Oct. 1 and Nov. 29. They focused on buying major large-cap tech stocks such as Samsung Electronics, LG Energy Solution and SK hynix.

As expected, Samsung Electronics topped the list, with foreign nationals purchasing shares of the firm worth 1.97 trillion won during the same period. LG Energy Solution came in second with 1.13 trillion won. The two companies are the nation's largest and second-largest companies by market capitalization.

Samsung SDI followed the list with 1.02 trillion won. SK hynix, another chip giant, also placed its name on the fourth most sought-after stock from foreign investors who purchased its shares, worth 650 billion won.

Market analysts said foreign investors returned to the local stock market on lingering expectations for the end of the rate hike cycle here and abroad.

"Foreign investors are expanding their buying spree on shares, the earnings momentum for which remains solid," Ahn Young-jin, an analyst at SK Securities, said. "Even if it appears too early to say that the economy will be able to achieve a rebound anytime soon, expectations are that the aggressive monetary tightening will be alleviated, which is a favorable factor for the local stock market."

In October, the portion of foreign investors' stock holdings in the Korean market reached 31 percent. This is the first time in five months since May that the figure reached more than 31 percent.

The figure for the secondary Kosdaq came in at 8.9 percent last month. But it slightly declined to 8.74 percent in November.

The aforementioned tech stocks also extended rallies for the past few months on foreign nationals' returns. Samsung Electronics shares hit this year's new low of 51,800 won on Sept. 30 amid sluggish chip industry conditions. But it has since achieved an outstanding rally, recovering to more than the 61,000-won mark as of Wednesday.

"Even if foreign investors do not engage in what appears to be an aggressive buying spree, they are not widening the selloff of local shares, which is a sign that they do not expect the main bourse to experience an additional downfall," Yuanta Securities analyst Jung In-ji said.

Lee Min-hyung

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