SK hynix and Kia Corp., runner-up stocks in the respective semiconductor and automobile sectors, have recently emerged as foreigners’ top picks over their larger peers Samsung Electronics Co. and Hyundai Motor Co. thanks to their stronger business performance and attractive valuation.

According to the Korea Exchange on Tuesday, foreign stake in the country’s bellwether stock Samsung Electronics, the largest memory chip producer at home and in the world, dropped to 50.74 percent as of May 16 from 53.9 percent a year ago after they net sold 13.26 trillion won ($10.46 billion) worth shares of Samsung Electronics.

Over the same period, offshore investors, however, increased their stakes in Korea’s No. 2 memory chip maker SK hynix to 49.7 percent from 48.99 percent. They net bought its shares worth 978.5 billion won, and their stake in SK hynix once topped 50 percent in February on expectation for a boom in the semiconductor sector.

Samsung Electronics as the country’s bellwether stock has been always the first target of overseas investors’ selling spree of local stocks, said Lee Seung-woo, an analyst at Eugene Investment & Securities. Foreigners dumped Samsung Electronics shares more than usual because they were also disappointed with its foundry business, he added. Unlike Samsung Electronics, SK hynix relies mainly on memory chip business, which benefitted from the industry’s upcycle.

In the automobile sector, offshore investors also reduced their ownership in the country’s No. 1 automaker Hyundai Motor to 26.87 percent as of May 16 from 30.05 percent a year ago. But they upped their holding in its smaller peer Kia from 32.79 percent to 35.75 percent over the same period. Foreigners net sold Hyundai Motor shares worth 1.45 trillion won during the period while net buying Kia shares worth 1.13 trillion won.

Given Kia’s 12-month forward price-earnings ratio (PER) hovering in the range of 5.5~8.3 times versus Hyundai Motor’s 7.4~10.9 times, the country’s No. 2 auto stock has more room to rise, according FnGuide data.

“Kia’s annual profit and operating margin are already higher than Hyundai Motor’s, making its valuation more attractive,” said Kim Gwi-yeon, an analyst at Daishin Securities.

By Kang Min-woo and Jenny Lee

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