Why Are Foreign Investors Continually Dumping Samsung Electronics and SK Hynix?

[Anchor]

Foreign investors are leading the recent sharp decline in the KOSPI, particularly offloading shares of Samsung Electronics and SK Hynix.

Despite strong earnings, why are they continuing to dump these stocks? Reporter Kim Hye-min has the details.

[Reporter]

Foreigners have net sold 202 trillion won worth of shares in the KOSPI market alone this year.

Months with net buying were limited to just two, January and April, and they have maintained a net selling streak for five consecutive months starting last May.

Selling has been particularly concentrated on two major semiconductor stocks: Samsung Electronics and SK Hynix.

It accounted for 76 percent of the total foreign net selling volume last month.

Analysts suggest this is driven by doubts over whether AI investments will continue to expand and whether memory semiconductor profit growth will persist, at a time when rising developed nation bond yields have reduced the appeal of stock investments.

[Huh Jae-hwan, Analyst / Eugene Investment & Securities: Given the intensity of foreign selling, the amount is three times higher, but considering the scale of the market, it is much larger. Roughly three to four times more than Taiwan.]

The recent decline in the won-dollar exchange rate is also acting as a factor encouraging foreign capital outflow.

Because investors can secure exchange gains when the Korean won is strong compared to before, even if they sell at the current KOSPI levels of 6,000 or 7,000, it is equivalent to selling back when the KOSPI was at 8,000 or 9,000 and the exchange rate was in the 1,500-won range, meaning substantial profit-taking is still possible.

Factors causing foreign funds to flow out will continue to emerge, such as the listing of Anthropic next month, while share buybacks by Samsung Electronics and SK Hynix are nearing completion.

On top of this, retail investors who had propped up the KOSPI are turning their eyes back to the United States.

Retail investors have net purchased 2.1 billion dollars worth of U.S. stocks this month alone, already surpassing the total U.S. stock net purchase volumes for August and September.

As the index plunged by 13 percent, or nearly 1,000 points, in just five trading sessions, anxiety over further declines is also growing.

[Lee Hyo-seob, Head of Financial Industry Division / Korea Capital Market Institute: Investors who invested using credit or leverage and face such massive losses could trigger a vicious cycle where these losses lead to forced liquidation, further accelerating the stock price drop. Therefore, retail investors using leveraged debt-financed investments need to exercise caution.]

While many evaluate that current stock price levels have entered a temporary oversold zone, a rebound requires a combination of geopolitical factors currently causing high oil prices and high interest rates, alongside expectations for mid-to-long-term earnings growth.

(Photo: Shin Jin-su, Video Editing: Kim Jong-tae, Designer: Kang Yoon-jung)
※ Please note: This article was translated by AI and may contain errors.