Foreign investors have intensified selling pressure on Korean semiconductor stocks since Q2, with consistent daily net selling since the 19th of last month, according to IBK Investment & Securities analyst Byun Jun-ho on the 8th. Samsung Electronics shares fell sharply on the previous day despite reporting solid earnings, with foreign investors identified as the primary sellers. Byun attributes the sustained selling to concerns over sentiment peak-out rather than fundamental deterioration, as market consensus indicates operating profit growth rates for Samsung Electronics and SK Hynix are expected to peak in Q2 or Q2-Q3 of this year. The semiconductor sector continues to show strong absolute performance, but growth rate deceleration expectations are driving preemptive profit-taking among foreign institutional investors.
Foreign Investors Show Selling Pattern During Profit Growth Peak Years
Byun noted that foreign investors demonstrated consistent selling dominance in the second half during previous years when Samsung Electronics and SK Hynix operating profit growth rates peaked, specifically in 2017, 2021, and 2024. The analyst stated that while both companies' earnings will continue to rise through next year, indicators such as margins and profit growth rates may turn downward. Foreign investors appear to be engaging in preemptive profit realization from the second half in anticipation of next year's growth rate slowdown, according to the analysis.
KOSPI Support Level Expected at 7,300 Based on Valuation Metrics
Byun assessed that the likelihood of KOSPI immediately entering a bear market with a drop exceeding 20% from its peak is low, given limited concerns about semiconductor industry conditions and earnings from a fundamental perspective. The analyst expects strong support formation near the 7,300 level. With KOSPI's return on equity (ROE) having risen to approximately 25%, the 7,300 level and below would represent excessive price-to-book ratio (PBR) discount, providing valuation-based support, Byun added. The analyst noted that price merit has emerged following KOSPI's sharp short-term decline since late June, suggesting foreign selling pressure may ease from the latter half of this week.
Market Recovery Requires AI Sentiment Improvement or Domestic Capital Inflow
Byun stated that for the market to show a meaningful rebound trend again, either improvement factors for investment sentiment regarding artificial intelligence (AI) and semiconductor industry conditions must emerge, or active domestic capital inflow is necessary. The analyst's assessment indicates that while fundamental semiconductor sector concerns remain limited, sentiment-driven factors will determine near-term market direction.
FAQ
When did foreign investors begin intensifying selling pressure on Korean semiconductor stocks?
Foreign selling pressure intensified from Q2, with consistent daily net selling occurring since the 19th of last month, according to IBK Investment & Securities analyst Byun Jun-ho on the 8th.
Why are foreign investors selling Samsung Electronics and SK Hynix despite strong earnings?
Byun attributes the selling to sentiment peak-out concerns rather than fundamental issues, as market consensus indicates operating profit growth rates for both companies are expected to peak in Q2 or Q2-Q3 of this year, prompting preemptive profit-taking in anticipation of next year's growth rate slowdown.
What support level does the analyst expect for KOSPI?
Byun expects strong support formation near the 7,300 level, noting that with KOSPI's ROE at approximately 25%, levels at or below 7,300 would represent excessive PBR discount from a valuation perspective.
