Samsung and Hynix are on fire, foreign investors are buying Korean stocks like crazy

The AI boom is helping the South Korean stock market set a record for quarterly foreign inflows.

On April 1st, Bloomberg compiled data shows that in the first quarter of this year, foreign investors net bought $12.2 billion worth of South Korean local stocks, ranking second in Asia, only behind Japan.

Among many investment areas, chip manufacturers involved in the global AI supply chain have become the top choice for foreign investors, such as Samsung Electronics and SK Hynix. These two stocks attracted $4.1 billion and $1.3 billion in net foreign funds in the first quarter, respectively.

SK Hynix's stock price has risen by 31.46% so far this year, and on April 1st, it rose by 4.1%, with a market value exceeding $100 billion.

Samsung Electronics' stock price has risen by 3.77% year-to-date, but has risen by 10.28% in the past month.

According to data from the Korea Financial Investment Association, as of March 28th, the foreign ownership ratio in the South Korean Kospi index has risen to 34.42%, the highest level since the second quarter of 2021.

Goldman Sachs analysts, including Timothy Moe, pointed out in a report that there is still room for more foreign inflows into the South Korean stock market. They wrote that due to $50 billion of funds withdrawn from South Korea between 2020 and 2022, the foreign ownership ratio of the Kospi index is still "relatively low."

Media cited Daishin Securities analyst Kyoung-Min Lee as saying that considering the recent upward momentum of the South Korean stock market (the Kospi index rose by 4% in March), investors may take profits in the coming weeks. However, he stated that overall, global investors may continue to buy throughout the year.

He said:

"With the rapid development of AI technology and the improvement in profitability of the memory industry, foreign investors will continue to increase their investments in South Korean stocks in the spot market."