SEOUL, Apr. 10 (Korea Bizwire) — Foreign investors have been increasing their buying of South Korean shares in recent sessions, data showed Wednesday, amid optimism, albeit cautious, over the chip industry and progress in U.S.-China trade deals.
According to the data compiled by the Korea Exchange (KRX), foreign investors extended their buying binge to eight straight sessions as of Tuesday, scooping up shares worth a combined net 1.58 trillion won (US$1.38 billion). So far this year, as of Tuesday, the KOSPI advanced 8.45 percent.
Tech blue chips, among others, were their top picks, including top-cap Samsung Electronics and major chipmaker SK hynix, as they bet their earnings would rebound down the road.
Samsung Electronics said earlier that its operating income for the first quarter is estimated at 6.2 trillion won, a 60.4 percent on-year drop, hit by falling memory chip prices and weak demand for display panels.
SK hynix Inc., another major chipmaker here, is anticipated to have logged an operating income of 1.75 trillion won in the first three months of this year, sharply down from the earlier market estimate of 4 trillion.
“Starting around the second quarter of this year, the semiconductor market is forecast to make a turnaround, and share prices of major chipmakers are to gather upward momentum,” Choi Do-yeon, an analyst at Shinhan Investment, said.
Global ratings agency Fitch also said in its latest report that such a downturn in the chip industry is forecast “to be less severe and shorter than previous cycles given production cuts, more diversified end-market applications and strong content growth,” adding that Samsung’s results are likely to recover towards the end of this year.
Offshore investors have been maintaining their buying mode on the local market this year, an about-face from the previous year, when they shed a net 5.7 trillion won worth of shares.
In January, foreigners purchased 4.05 trillion won of shares on the main bourse, the largest amount in nearly four years, on signs of eased trade frictions between Washington and Beijing and hopes for China’s stimulus measures, according to the data.
In February and March, their net buying reached 140.8 billion won and 301 billion won, respectively.
“Dovish monetary stances from major economies and the optimism on the ending of the U.S.-China trade war appear to whet their appetite for risk, and such a flow could continue for some time,” Lee Young-gon, an analyst from Hana Financial Investment, said.
But lingering concerns over a global economic slowdown and possible trade restrictions by the U.S., such as tariffs on autos, are forecast to add greater volatility to the market, Lee noted.