Why Are Foreign Investors Continually Dumping Samsung and SK Hynix?

[Anchor]

Foreign investors are driving the recent sharp decline in the KOSPI. In particular, they are heavily selling shares of Samsung Electronics and SK Hynix.

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

[Reporter]

Foreign investors 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 a net-selling streak has continued for five consecutive months starting from May.

Selling has been particularly concentrated on two major semiconductor heavyweights, Samsung Electronics and SK Hynix.

They accounted for 76% 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 government bond yields have diminished the appeal of stock investments.

[Huh Jae-hwan, Analyst / Eugene Investment & Securities: Considering the intensity of foreign selling, even though the net amount is three times larger, when you factor in the market size, it is much bigger. 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 a stronger Korean won allows investors to secure exchange rate gains compared to before, even if they sell at the KOSPI 6,000 or 7,000 levels now, it is akin to realizing substantial profits—similar to selling when the KOSPI was at the 8,000 or 9,000 levels and the exchange rate was in the 1,500-won range.

Factors causing foreign capital 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 previously propped up the KOSPI are turning their eyes back to the United States.

Retail investors have net-purchased USD 2.1 billion worth of U.S. stocks this month alone, already surpassing the total U.S. stock net-buying volume for August and September.

With the index plunging 13%—nearly 1,000 points—in just five trading days, anxiety over further declines is also growing.

[Lee Hyo-seop, Head of Financial Industry Research / Korea Capital Market Institute: Investors who used credit or leverage to invest in stocks and suffer such massive losses could face a vicious cycle where these losses trigger forced liquidation, further accelerating the stock price drop. Therefore, retail investors trading on borrowed funds need to exercise caution.]

Many evaluate that current stock price levels have entered a temporary oversold zone, but for a rebound to occur, geopolitical factors causing high oil prices and high interest rates, alongside expectations for mid-to-long-term earnings growth, are all necessary.

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