Ownership Trading
As foreign investors sold representative shares in the domestic information technology (IT) industry, including Samsung Electronics and SK Hynix, the KOSPI index fell.
According to data from the Korea Exchange (KRX) on Aug. 17, the KOSPI index slipped 14.94 points, or 0.75 percent, to close at 1,968.52 from a day earlier. This was the first time that the KOSPI index fell below 1,970 six months after it closed at 1,968.39 on Feb. 23.
With the KOSPI crossing the 1,980 level in early trading, it raised hopes of turning bullish. However, a strong selling spree by foreign investors that continued for the eighth straight trading day after Aug. 5 dragged Korean shares below 1970. Although both individual and institutional investors purchased local shares worth 134.8 billion won (US$113.95 million) and 154.4 billion won (US$130.52 million), respectively, foreign investors sold for more than 320 billion won (US$270.5 million). This month alone, foreign investors sold more than 1 trillion won (US$845.31 million) worth of local shares in the stock market. In particular, they sold 841 billion won (US$710.9 million) in the last three days.
Foreign investors are mainly selling shares of electronics and cars, which have the largest market caps. On the same day, they sold nearly 170 billion won (US$143.7 million) worth of major shares of the electronics industry, including 87.8 billion won (US$74.22 million) of Samsung Electronics shares and 56.2 billion won (US$47.51 million) of SK Hynix. In the car industry, 7.3 billion won (US$6.17 million) of Hyundai Motor and 13.9 billion won (US$11.75 million) of Kia Motors shares were sold. The figures were more than half of the total shares sold by foreign investors on the day. A selling spree by foreign investors that continued for the third straight trading day forced Samsung Electronics shares to close at 1,104,000 won (US$931), which was the lowest this year.
Kim Yong-koo, an analyst at Samsung Securities, said, “Before the rise in interest rates in the U.S. next month, the dollar is getting stronger and the currency of emerging countries is getting weaker. Also, the demand of raw materials, including crude oil, has become dull. Accordingly, global capital is rapidly flowing from emerging markets to advanced markets. Moreover, as the prospects of the nation’s major IT companies, including Samsung Electronics, has become uncertain in the second half of the year, foreign investors who cannot find growth momentum, are scrambling to sell local shares.”