While foreigners are scooping up Korea's large-cap semiconductor stocks on expectations of an industry upturn, individual investors are doing the opposite by offloading shares. As chip stocks surged in a short period, individuals appear to be taking profits or betting against further gains based on a perception that prices are high.
According to the Korea Exchange (KRX) on the 21st, foreigners have net bought 4.0963 trillion won in the main bourse so far this month through the previous day. Of that, about 3 trillion won (75%) concentrated in large-cap semiconductor names, including 2.0485 trillion won in SK hynix and 1.0335 trillion won in Samsung Electronics. In effect, 75% of foreign inflows were funneled into semiconductors.
In contrast, over the same period individual investors net sold 6.6261 trillion won of Samsung Electronics and 3.7068 trillion won of SK hynix. Combined, the two totaled about 10.3329 trillion won, accounting for 66% of total net selling. That contrasts with last month, when individuals net bought 16.8172 trillion won of Samsung Electronics and 7.0705 trillion won of SK hynix.
The shift away from semiconductors by individual investors is also evident in the exchange-traded fund (ETF) market. Over the past week (Apr. 14–20), individuals net sold 127.6 billion won of "TIGER Semiconductor TOP10 Leverage," the fourth-largest net sell among all ETFs, and also ranked high in net selling for "TIGER Semiconductor TOP10" (82.6 billion won, No. 6) and "KODEX Semiconductor Leverage" (74.6 billion won, No. 8).
Korean retail investors trading U.S. stocks, who invest in overseas equities, are showing a similar pattern. According to the Korea Securities Depository (KSD) securities information portal, SEIBro, individual investors have net bought the most this month in the "Direxion Daily Semiconductor Bear 3X ETF" (SOXS). The product delivers three times the inverse of the one-day return of the "ICE Semiconductor Index." A total of $280.94 million (about 413.3 billion won) flowed in through the previous day. Even though the ICE Semiconductor Index has extended gains for 14 consecutive sessions from the 31st of last month through the previous day, bearish bets have continued.
Despite a still-positive outlook for the semiconductor cycle, the recent sharp rise in share prices appears to have led individuals to place more weight on the possibility of a pullback than further gains. In fact, SK hynix rose intraday to 1,227,000 won, a 1-year high, and Samsung Electronics climbed intraday to 220,000 won, approaching its previous peak of 228,500 won.
Lee Sang-yeon, a researcher at Shinyoung Securities, said, "As semiconductors have jumped a lot recently, investors are looking to sectors other than the absolute leading group to generate additional revenue," and noted, "Stock prices tend to cool after April earnings reports, and this is a time to consider names that can hold up in preparation."
Foreign investors, by contrast, are seen buying on expectations of further upside in the semiconductor sector. In particular, considering that foreigners reduced exposure by net selling Samsung Electronics and SK hynix every month from the start of the year through March, the recent strong buying is viewed largely as refilling positions that had been left empty.
The researcher said, "As an emerging market, Korea carries the highest geopolitical risk in foreign investors' portfolios, so there had been excessive trimming through last month," and added, "With the Philadelphia Semiconductor Index hitting a record high day after day and earnings from Intel and SK hynix scheduled this month, foreigners appear to be buying in advance."