Trading room at Kookmin Bank’s branch in Yeouido, Seoul on August 5 (Courtesy of Yonhap)
Foreigners and institutional investors in the South Korean stock market picked biotechs as their most favorite shares amid the market crash last week followed by negative US economic news on Aug.5, hoping biopharmaceutical stocks jump with a momentum for interest rate cuts.
Foreign investors picked Samsung Biologics Co. stocks the most, net buying the contract drugmaker shares worth of 99.3 billion won ($72.7 million) for five days from Aug. 5, data from the Korea Exchange (KRX) showed on Saturday.
Institutional investors chose biotech Celltrion Inc. shares as their No. 1 Korean stock, with 98.5 billion won worth of net buying during the same period,
A majority of biopharmaceutical stocks are growth shares, which trade at a discount to their expected future earnings. Such stocks could be particularly sensitive to rates that affect both the discount rate and financing costs.
“Biopharmaceutical stocks can move upward when momentum grows for rate cuts. Also, there are strong demands for obesity and Alzheimer’s disease treatment and some biopharmaceutical firms combine their technologies with artificial intelligence to explore new markets,” said Park Seung-jin, an analyst at Seoul-based Hana Securities Co.
Foreign investors net bought 80.7 billion won worth of tobacco maker KT&G Corp. stock as their second-most favorite pick last week. Foreigners also net purchased 44.1 billion won worth of the country’s No. 1 mobile carrier SK Telecom Co. and 33.6 billion won worth of steel giant POSCO Holdings Inc. in the same period.
Institutional investors’ second and third most favorite stocks were wind turbine tower maker CS Wind Corp. and game developer Shift Up Corp. The investors net bought 57 billion won and 43.4 billion won worth of each share, respectively.
RETAIL INVESTORS EYEING CHIPS
Semiconductors were among individual investors’ favorite stocks. Retail investors net bought 2.54 trillion won worth of global top memory chipmaker Samsung Electronics Co. shares as their top choice for the five trading days of last week.
Samsung’s crosstown rival SK Hynix Inc. ranked fourth in individual investors’ picks. Retail investors net bought 85.3 billion won worth of the shares in the same period.
Retail investors also net purchased 224.5 billion won worth of cosmetics powerhouse Amorepacific Corp., 103.1 billion worth of internet giant Naver Corp. and 89.9 billion won worth of automaker Kia Corp. last week.
The current share prices of Samsung Electronics are 1.1 times and 9.1 times the price-to-book ratio (PBR) and price-to-earnings ratio (PER) of the next year’s earnings estimate, Seoul-based KB Securities Co. research head Kim Dong-won said in a report on Aug. 8, adding that it is good timing to buy the tech giant’s shares.
Some analysts have warned that investor sentiment could be weakened by woes over oversupply of chips.
“If Nvidia Corp., which has met its consumption with SK Hynix’s supply, decides to purchase Samsung Electronics’ fifth-generation high-bandwidth memory chips HBM3E, it may lead to intensifying competition in the sector and oversupply of the memory interface,” said Song Myung-sup, a researcher at Hi Investment & Securities Co. in a report last month.
Korean retail investors also bet on global semiconductor stocks last week.
Between Aug. 5 and 9, domestic individual investors’ most favorite exchange-traded fund (ETF) was the Direxion Daily Semiconductor Bull and Bear 3X Shares which tracks daily investment results of the New York Stock Exchange (NYSE) Semiconductor Index’s performance.
Korean retail investors also bet on Proshares Ultrapro QQQ ETF, which seeks daily investment results of the Nasdaq-100 Index performance, Graniteshares 2x Long NVDA Daily ETF which seeks results of daily change of Nvidia common shares and the Direxion Daily TSLA Bull 2X Shares seeking results of daily performance of Tesla Inc. common shares.
By Jung-dong Roh
dong2@hankyung.com
Jihyun Kim edited this article.
