Foreign investors executed a three-day buying spree in Korean stocks totaling 3.457 trillion won from April 20 to April 22, marking their return to the KOSPI market after a period of net selling. The buying surge came as the KOSPI's 12-month forward price-to-earnings ratio fell below 6x following an 18.1% decline in April, reaching what analysts describe as a historically undervalued level. On April 22, the KOSPI closed at 6797.90, up 0.74% (49.75 points), as foreign investors purchased 2.612 trillion won in net terms while retail investors sold 1.2176 trillion won and institutional investors offloaded 1.3963 trillion won. The foreign buying activity concentrated heavily in the semiconductor sector, with 3.1817 trillion won flowing into electronics and electrical industry stocks during the three-day period. Market analysts attribute the foreign investor return to improved valuation appeal following the sharp correction, with the KOSPI's fundamental outlook remaining intact despite the recent price decline.
Foreign Investors Purchase 3.457 Trillion Won Over Three Trading Days
According to the Korea Exchange on April 22, foreign investors purchased 836 billion won on April 20-21, then accelerated their buying to 2.6211 trillion won on April 22. The three-day total reached 3.457 trillion won in net purchases. During the same period, retail investors and institutions engaged in profit-taking, with the KOSPI briefly touching the 7000-point level intraday on April 22 before closing at 6797.90.
Byun Jun-ho, a researcher at IBK Investment & Securities, stated: "From a valuation perspective, the KOSPI's undervaluation merit has increased due to the recent short-term sharp decline. If concerns about earnings are not significantly damaged, this could be a time when valuation merit can be gradually highlighted."
The foreign buying concentrated in the semiconductor sector, with the electronics and electrical industry receiving 3.1817 trillion won in net foreign purchases during the three-day period. Market participants attribute this sector focus to valuation opportunities created by recent price corrections in major semiconductor stocks.
Morgan Stanley and JP Morgan Maintain Bullish KOSPI Targets
On April 21 (local time), Morgan Stanley maintained its base scenario target of 9000 points for the KOSPI, stating that the index has approached a bottom despite the recent significant correction. The investment bank assessed that the KOSPI's 12-month forward valuation is close to historical lows.
Morgan Stanley projected that memory semiconductor shortages will intensify through 2028 and suggested viewing the recent price correction in memory semiconductor-related stocks as a buying opportunity.
JP Morgan maintained its 'overweight' rating on the KOSPI with a 12-month target of 12000 points. The firm diagnosed that the recent KOSPI decline was driven by intensive deleveraging and analyzed that the deleveraging process is approaching its final stage.
JP Morgan stated: "Korea's corporate earnings growth rate will slow from the explosive level of 2025, but it is important that the elevated earnings level is maintained. Key leading indicators such as AI model performance, funding conditions, and data center rental rates remain positive."
Analysts Monitor Foreign Buying Sustainability Ahead of US Tech Earnings
Market analysts evaluate that additional selling pressure from foreign investors will be limited for the time being, given the large scale of recent foreign selling. The analysis suggests that as profit-taking sales have been substantially absorbed, additional selling pressure is also easing.
Byun stated: "The biggest factor in recent foreign selling was profit-taking on tremendous returns from the surge in Samsung Electronics and SK Hynix stock prices. In terms of short-term market conditions, changes in fundamentals that could cause the market to plummet were limited, so profit-taking sales acted as a burden on short-term supply and demand."
Han Ji-young, a researcher at Kiwoom Securities, diagnosed: "It appears highly likely that profit-taking and weight reduction work on Korea's semiconductor-centered stock market has entered the final stage."
Alphabet's earnings will be released in the early morning of April 23 (Korean time). If the company presents large-scale investment plans for next year following this year, the semiconductor sector's upward trend could unfold in earnest. Conversely, if Alphabet reduces capital expenditure, doubts about AI growth could increase, leading to additional stock price corrections.
Lee Jae-won, a researcher at Yuanta Securities, stated: "Foreign investors' recent consecutive net purchases of KOSPI are a positive signal, but confirmation of a trend reversal to the upside is reserved. It is necessary to confirm supply and demand after US large-cap tech stock earnings announcements."
FAQ
Q: How much did foreign investors buy in Korean stocks from April 20 to April 22?
A: Foreign investors purchased a total of 3.457 trillion won in net terms over the three trading days from April 20 to April 22, with 2.612 trillion won purchased on April 22 alone.
Q: Why did foreign investors return to buying Korean stocks after recent selling?
A: Analysts attribute the foreign buying to improved valuation appeal, as the KOSPI's 12-month forward price-to-earnings ratio fell below 6x following an 18.1% decline in April, reaching historically undervalued levels. The buying concentrated in the semiconductor sector, which experienced significant price corrections.
