Foreign Investors Return to Buying Semiconductors... Brokerage Houses Say the Rally Has More Room

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[The Financial News] Foreign investors have turned back to net buying of the country’s leading semiconductor stocks this month, redirecting funds into the sector. As risk appetite has recovered after easing Middle East risks, and expectations for an improvement in the memory market have also grown, buying has concentrated on Samsung Electronics and SK hynix. Brokerage houses say second-quarter earnings and memory price trends will be the key factors determining whether the semiconductor sector can extend its gains.
According to the Korea Exchange (KRX) on the 20th, Samsung Electronics ranked first among net-bought stocks by foreign investors from the 1st to the 17th of this month, with net purchases of 1.6564 trillion won. SK hynix came in second with 1.4326 trillion won, while Samsung Electronics preferred shares ranked fourth after recording 416.2 billion won in net buying.
Over the same period, institutions bought 1.4996 trillion won worth of SK hynix shares, placing it first overall, and also net bought 260.8 billion won worth of Samsung Electronics. Retail investors, meanwhile, took profits by net selling 6.9182 trillion won of Samsung Electronics and 2.9835 trillion won of SK hynix.
The expectation of an improving industry backdrop is driving foreign capital back into semiconductors. DRAM and NAND flash memory prices have recently continued to rebound, while demand for HBM is also holding up on the back of expanded investment in Artificial Intelligence server infrastructure. Analysts also say the sector’s status as a key export driver and a heavyweight in the domestic market makes it one of the first areas to attract foreign money whenever the broader market turns higher.
Brokerage houses are especially raising their outlook for SK hynix. They expect the company’s second-quarter operating profit to rise to around 6.1 trillion won and have set target prices as high as 1.9 million won. In April, brokerage target prices for SK hynix ranged from 1.3 million won to 1.9 million won. The view is that its dominance in the HBM market, combined with rising prices for conventional memory chips, could drive a sharp improvement in earnings.
Samsung Electronics is also expected to benefit from higher memory prices. In addition, narrowing losses in foundry operations and a recovery in HBM competitiveness are being cited as key factors for a future re-rating of the stock. The fact that foreign investors bought Samsung Electronics the most is also being interpreted as a sign of expectations for an industry rebound.
Hyungkeun Ryu, a research analyst at Daishin Securities, said, "The combined market capitalization of Samsung Electronics and SK hynix has reached 2,000 trillion won," adding, "The unexpectedly strong pace of short-term earnings growth, along with the value of a longer cycle under a structural shift toward long-term contracts, is expected to drive a re-rating of share prices."
 
koreanbae@fnnews.com Bae Han-geul Reporter