Foreign and institutional investors cherry-pick value, bio stocks amid selling spree

2021.06.11 13:51:44 | 2021.06.11 13:52:13

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Foreign and institutional investors who net sold over 35 trillion won ($31.5 billion) worth stocks in South Korea since the beginning of the year cherry-picked on value and bio stocks that can benefit from vaccine rollouts.

Foreign investors sold off 16.15 trillion won worth Korean stocks and institutional investors 18.93 trillion won from January to June 10. They have gone on a selling spree to take profits from the rally on the Kospi market boosted by heated retail buying. Individual investors bought 50.95 trillion won in the Kospi this year.

Amid selling, foreign investors increased ownership in value stocks with low volatility.

SK Telecom was the top pick by overseas investors who net purchased 1.46 trillion won from the beginning of the year. “SK Telecom that has a spin-off plan within this year doesn’t have a big risk factor, while it has seen an increasing number of 5G subscribers and stable fixed costs,” said Lee Soon-hak, an analyst from Hanwha Investment Securities. Offshore investors are also taking a defensive posture against the U.S. Fed’s possible monetary tightening, experts said.

Other top buys included LG Chem, Posco, Shinhan Financial Group and KB Financial Group. They have mostly picked cyclical stocks as the global economy is forecast to rebound on the rapid vaccine rollouts.

Institutional investors showed bias towards bio stocks with high growth potential. The top-buying stock of the country’s pension funds was Samsung Biologics, which obtained 56 contract manufacturing orders last year, up from 36 in 2019. The company would also begin to roll out Moderna’s Covid-19 vaccine in the third quarter. Pension funds net bought 512.9 billion won in Samsung Biologics this year.

S-Oil ranked second in the list of top institutional buying, followed by SK Bioscience, LG Display and KT.

SK Bioscience signed a consignment contract with Novavax to produce its Covid-19 vaccines in August. LG Display is expected to turn around in the second quarter thanks to the steady rise in LCD panel prices and their stable sales, Lee said.

Top retail choice was Samsung Electronics, followed by Samsung Electronics preferred shares and SK hynix. Their choice is in stark contrast with that of foreigners and institutional players who sold off 18 trillion won in chip stocks.

Samsung Electronics shares have been hovering around the 80,000 won range since the beginning of the year. As of 11:27 a.m. on Friday, Samsung Electronics fell 0.37 percent to 80,700 won.

By Kim Gyu-sik and Choi Mira

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