Foreign investors were found to have shown a trading pattern in which they kept net selling the common shares of Samsung Electronics and SK hynix day after day, while repeatedly buying and selling the two stocks' single-stock leveraged products. The strategy is analyzed as selling stocks that surged in a short period to rebalance portfolios while additionally securing revenue through trading leveraged products.
According to the Korea Exchange (KRX) on the 14th, foreigners posted a net sale of 124.6 billion won of seven SK hynix single-stock leveraged products from on the 27th of last month, when single-stock leveraged products were first listed, to on the 12th. By trading day, however, there were net sales on 7 of the 12 sessions and net purchases on 5, showing a pattern of selling for 2–3 days and then buying for a day or two.
It was the same for the seven Samsung Electronics single-stock leveraged products. During the same period, foreigners' net sales totaled 17.5 billion won, and the trading-day pattern was also 7 days of net selling and 5 days of net buying, the same as SK hynix. In particular, for Samsung Electronics single-stock leveraged products, foreigners' cumulative purchases exceeded sales in six products except for TIGER.
By contrast, the common shares moved in the opposite direction. Samsung Electronics saw 10 consecutive trading days of foreign net selling from on the 27th of last month to on the 10th, and SK hynix saw 23 consecutive trading days of foreign net selling from on the 7th of last month to on the 10th, before turning to net buying on on the 11th.
From on the 27th of last month to on the 12th, foreigners' cumulative net sales amounted to 12.6098 trillion won for Samsung Electronics and 7.8761 trillion won for SK hynix, exceeding a combined 20 trillion won. As a result, foreigners' equity stakes fell to their lowest levels of the year for both Samsung Electronics (47.58% as of on the 12th) and SK hynix (51.05% as of on the 11th).
In the securities industry, the view is that foreigners moved to take profits as part of adjusting portfolio weights in large-cap semiconductor stocks that surged this year. However, with the semiconductor cycle buoyant and the two stocks still attractive, it is analyzed that they sought additional revenue through trading single-stock leveraged products.
Lim Eun-hye, head of the ETP strategy team at Samsung Securities, said, "Foreigners account for 35%–45% of transaction share in single-stock leveraged products," and noted, "They conducted high-frequency arbitrage transactions across cash equities, futures, and ETFs."
She added, "Single-stock leverage has advantages in terms of transaction ease, bid-ask spreads, and expense," and explained, "Accordingly, unlike aggressively selling cash equities, foreigners frequently alternated between buying and selling in single-stock leveraged products."