KOSPI Swings Sharply as Foreigners Book Profits on Samsung and SK Hynix While Individuals Buy the Dip While Analysts Say Semiconductor Fundamentals Remain Intact
The closing prices, including the KOSPI index, are displayed on the electronic board at the dealing room of Shinhan Bank headquarters in Jung-gu, Seoul, on the afternoon of May13.
The KOSPI index showed a ‘rollercoaster’ market trend, recording the highest level of volatility since the United States airstrike on Iran in March.
On May 13, the KOSPI closed trading at 7844.01 , up 200.86p (2.63%) from the previous day. On the previous day, the index had slipped to the 7400 mark due to a sharp drop which had resulted from the union strike crisis at Samsung Electronics and the ‘AI national dividend remarks’ by Kim Yong-beom, Chief of Staff for Policy at the Blue House. But the KOSPI on May 13 recorded an all-time high based on the closing price as SK Hynix and Samsung Electronics rebounded.
With high volatility moving up to 453p in a single day, the VKOSPI (Korean fear index), which indicates the volatility of the KOSPI 200 index, also recorded 76.16p, the highest level since March 4 (80.37p).
On March 4, right after the United States airstrike on Iran, the KOSPI plummeted by 12% in a single day, recording the largest drop rate in history and showing extreme volatility.
Analysts say that the recent rise of the VKOSPI to the 70p range, indicating high volatility, is largely due to the supply and demand impact of a buying spree by individuals following a massive sell-off by foreigners.
Although the KOSPI index broke its all-time high again on May 13, foreigners have been showing a ‘sell-off’ trend for five consecutive trading days from May 7 to this day, raising concerns that foreign investors may be taking profits. Foreigners particularly focused their selling on Samsung Electronics and SK Hynix. Foreigners sold 1.55 trillion won worth of Samsung Electronics and 1.72 trillion won worth of SK Hynix on May 13.
Foreigners net sold a cumulative 24.25 trillion won in the KOSPI over the past five consecutive trading days, which is five times the annual foreign net selling amount in the KOSPI last year (4.655 trillion won). This appears to have stimulated the sell-off as concerns over a high point have recently grown, centering on large domestic semiconductor stocks.
Individual investors net bought 21.399 trillion won during the same period using a ‘buy the dip’ strategy, entering the market after a correction, and led a sharp rebound following the index’s plunge. There was a net selling of 3.758 trillion won in the KOSPI market.
The extreme concentration in semiconductor stocks is also fueling volatility. During the same period, the top two stocks for foreign net selling and the top two for individual net buying were Samsung Electronics and SK Hynix.
Foreign and individual supply and demand are concentrated on Samsung Electronics and SK Hynix, and since these two stocks account for half of the total KOSPI market capitalization, the structure inevitably highlights the range of fluctuations. Based on the closing price on this day, the combined market capitalization of Samsung Electronics (common and preferred shares) and SK Hynix was 3.220 quadrillion won, taking up 50.1% of the entire KOSPI.
Stock market experts view this as the result of growing demand for both profit-taking and FOMO as stock prices have risen sharply amid an increased concentration in semiconductor stocks. Samsung Electronics and SK Hynix surged by 28.8% and 53.7%, respectively, this month alone.
While the highly volatile market trend will be maintained for a while, there is considerable opinion that the stock price correction should be used as a buying opportunity, as the fundamentals of semiconductor stocks remain valid. Analysts suggest that although foreigners have sold over 18 trillion won in the KOSPI this month alone, it should be seen as short-term profit-taking, given that the foreign ownership ratio stood at 39.58% as of the previous day, recording the highest level in history since 2020.
Han Ji-young, a researcher at Kiwoom Securities, said, “When converting the VKOSPI into daily volatility, the current 70p range means that the stock price fluctuation rate could show a daily level of 4% in the future.” He added, “However, considering that only the speed of the stock price increase is a burden right now, and fundamental upward driving forces such as profits, valuation, and individuals’ money moves are being maintained, it is appropriate to maintain a strategy of expanding the proportion of stocks centered on AI value chain stocks, including semiconductors.”
Yoon Young-sil
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