Foreign Investors Return with 6 Trillion Won Net Buying in April, Eyeing K-Beauty Stocks

[The Financial News] Foreign investors, who have turned net buyers in the Korean stock market since April, are showing strong interest in cosmetics stocks. As earlier expectations materialize, industries with solid fundamentals are leading the gains.
According to the Korea Exchange (KRX) on the 17th, foreign investors have posted a net purchase of 6.3411 trillion won in the domestic stock market so far this month. This contrasts with their net selling of 35.7122 trillion won in the Korean market in March.
In particular, they have been buying selected cosmetics stocks this month. Foreign investors purchased 286 billion won worth of APR shares in April. They also recorded net buying of 12.9 billion won in d'Alba Global and 6.3 billion won in Cosmax. Domestic institutions, which have bought a net 4.6102 trillion won in the market this month, likewise purchased 83.8 billion won in d'Alba Global, 57.6 billion won in Silicon Two, and 33.4 billion won in Kolmar Korea over the same period.
Cosmetics stocks have indeed been on a strong run recently. The NH-Amundi HANARO K-Beauty ETF, which tracks a basket of cosmetics names, has risen 15.42% over the past month. During the same period, the Mirae Asset TIGER Cosmetics ETF gained 15.84%, while the SOL Cosmetics TOP3 Plus ETF jumped 21.70%.
The first quarter is traditionally considered an off-season for cosmetics, and the recent outbreak of war had raised concerns about weaker earnings. However, as the sector delivered solid first-quarter results, including record export figures, investor sentiment has turned positive. According to the Ministry of Food and Drug Safety, cosmetics exports in the first quarter reached an all-time high of 3.1 billion dollars, up 19% from a year earlier.
Kim Hye-mi, an analyst at Sangsangin Investment & Securities, stated, "The war that broke out at the end of February has acted as a shock to the global economy as a whole. While its impact on cosmetics is expected to be reflected from the second quarter onward, the risk is unlikely to be prolonged," adding, "Investors should focus on companies that are accelerating earnings growth driven by overseas markets and maintaining solid performance."
Brokerage houses expect cosmetics stocks to gain further momentum as the industry enters its peak season in the second quarter. Korean cosmetics companies are also speeding up their expansion into overseas markets.
Kim added, "The overall growth trend of the industry, led by indie brands, is continuing, and further market expansion is anticipated this year," and predicted, "In particular, export growth to Western markets such as the United States and Europe, combined with a shift from online—previously the main sales channel—to offline channels, will accelerate this trend."
Heo Je-na, an analyst at DB Securities, explained, "Investor sentiment toward the cosmetics sector is improving, as the industry is moving out of the off-season into the peak season, while brand companies are clearly on an upward earnings trajectory." She added, "In the first quarter as well, K-beauty led the Amazon Beauty & Personal Care category and matched the preferences of consumers who prioritize product efficacy."

yimsh0214@fnnews.com Reporter Lim Sang-hyuk Reporter