Since the start of this month, foreign investors have dumped nearly 20 trillion won worth of Korea's flagship semiconductor stocks, including Samsung Electronics and SK hynix.
By contrast, individual investors not only snapped up most of the shares sold by foreigners but also piled into high-risk leveraged products, leaving them with heavy losses from the share-price plunge.
On the 30th, according to the Korea Exchange (KRX), SK hynix and Samsung Electronics ranked first and second in net selling by foreigners in July (from the 1st to the 29th). During the period, foreigners sold a net 11.2034 trillion won of SK hynix and 8.2473 trillion won of Samsung Electronics, totaling 19.4507 trillion won.
Individual investors moved in the opposite direction. Over the same period, SK hynix (13.645 trillion won) and Samsung Electronics (8.1135 trillion won) also topped net buying by individuals. In effect, Les Fourmis scooped up more than 21.7 trillion won of the semiconductor shares thrown by foreigners.
The diverging investment directions did not stop with the underlying stocks. Even in the single-stock leveraged exchange-traded fund (ETF) market, which bets on share price gains, the views of foreigners and Les Fourmis split sharply.
In the two SK hynix single-stock leveraged products (KODEX and TIGER), foreigners were net sellers of a total 146.4 billion won, while individuals were net buyers of 2.956 trillion won (2.1201 trillion won in KODEX and 835.9 billion won in TIGER). In Samsung Electronics leveraged products, individuals bought 653.5 billion won while foreigners were net sellers of a total 85.5 billion won.
The problem is that the two stocks plunged over the month of July. During the period, SK hynix and Samsung Electronics tumbled 45.2% and 33.7%, respectively. As foreigners kept selling in relay fashion, losses from leverage layered on top of the crash in the underlying assets, deepening the woes of individual investors who tried to catch the bottom.
Experts cite the sharp corrections in the two heavyweight semiconductor leaders, which dominate market weightings, as the reason for the market's recent turn lower. The view is that even as the KOSPI surged past 9,000 in June, it reversed course because Samsung Electronics and SK hynix crashed, setting the tone for the broader market.
Lee Young-won, a researcher at Heungkuk Metaltech Securities, said, "As expectations that the fruits of artificial intelligence (AI) growth would concentrate in the semiconductor industry turn into doubt, share price declines are becoming a reality."
The explanation is that although the two companies announced mega projects in partnership with the government and at the same time unveiled cooperation plans with global big tech in San Francisco, including Nvidia, AMD, OpenAI, and Anthropic, market assessments went in the opposite direction.
In particular, the market sees doubts about the sustainability of hyperscalers' investments, concerns that earnings forecasts have peaked, and the rapid pursuit by Chinese semiconductor firms as direct burdens.
The researcher noted, "News that China's ChangXin Memory Technologies (CXMT) is pursuing a listing and that big tech companies such as Apple are exploring the possibility of procuring Chinese-made semiconductors is threatening the existing oligopoly structure of the memory market," adding, "On top of that, reports of China's in-house development of deep ultraviolet (DUV) lithography equipment have further amplified concerns about Chinese semiconductor competitiveness."
There is also a view that the current share-price decline is excessive, reflecting multiple negatives at once. While the market has moved swiftly to adjust prices by factoring in concerns on both the demand and supply sides, there is room for a rebound if short-term headwinds ease.
The researcher forecast, "On a 12-month forward estimated earnings basis, the price-earnings ratios (P/E) of Samsung Electronics and SK hynix are only about 3.3 times and 3.9 times, respectively, and the market P/E based on the KOSPI 200 index has also fallen below 5," adding, "If forthcoming earnings announcements by each corporation provide a fair assessment of the concerns raised, the excessively advanced price correction could be adjusted."