[비즈한국] State affairs remain in turmoil following the December 3 emergency martial law declared by President Yoon Suk Yeol. While the situation was resolved without armed conflict during the execution of the arrest warrant for President Yoon, the situation is escalating politically as the president's hardline supporters, protesting the issuance of the arrest warrant, stormed the Seoul Western District Court and engaged in violent acts.
News headlines such as "First time in constitutional history" and "Unprecedented events since democratization" continue to flood in, keeping the situation unpredictable. With warnings that a prolonged political stalemate could lock the national economic growth rate into the 1% range, we truly face a "mountain after mountain" scenario. Furthermore, the increased uncertainty following the launch of Donald Trump's second administration also presents a risk for us.
However, as foreign investors' selling streak in the domestic stock market has been easing this year, there is advice to pay attention to undervalued stocks.
Foreigners have been the key players in the domestic stock market. They had maintained a selling trend in the KOSPI market since July of last year. Then, as market uncertainty surged due to the December 3 emergency martial law and the impeachment situation, foreigners offloaded 6 trillion won worth of domestic securities (stocks + bonds) last month, with net sales in the KOSPI market alone reaching 3.977 trillion won. However, as of the 20th of this year, they have recorded a net purchase of 463.8 billion won.
Kim Jun-woo, a researcher at Eugene Investment & Securities, stated, "With the inflow of foreign active funds, the KOSPI has broken through its downward trend and is showing a pattern of settling above the 60-day moving average," adding, "This means the market is shifting toward a stabilization trend due to reduced foreign selling pressure." Researcher Kim added, "The decrease in foreign selling pressure in the undervalued zone suggests the possibility of bottom-fishing by foreigners, which also serves to mitigate downside risks caused by short-term fluctuations." Additionally, pension funds are joining the net buying spree in the KOSPI. As of the 20th of this year, pension funds have purchased 1.2468 trillion won worth of stocks in the KOSPI market.
By stock, foreigners have made the largest net purchases of SK Hynix000660, Hanwha Aerospace012450, Hanwha Ocean042660, and Naver035420 this year, while pension funds have been buying Samsung Electronics005930, SK Hynix, Samsung Biologics, and SK Innovation.
Jung In-ji, a researcher at Yuanta Securities, said, "The fear index (VKOSPI) is showing signs of entering a stable volatility phase as its short-term peaks are lowering and it appears to be moving away from previous lows, indicating the potential for a gradual rise in stock prices." Among KOSPI stocks, expectations are growing for SK Hynix, which has been hitting new highs daily thanks to net buying by foreigners and institutions. Researcher Jung noted, "On the 17th, SK Hynix saw its gains expand following news of the mass production of 10-nanometer-class 6th generation DRAM. Technically, having confirmed the breakout from its October peak, it is fair to say the door is open for it to rise to its previous year's high of 250,000 won."
Ultimately, analysis suggesting that now is the time to time bottom-fishing is gaining traction amidst the outlook for a gradual KOSPI recovery. Lee Kyung-min, a researcher at Daishin Securities, forecasted, "As the low domestic stock allocation and pressure from a weak won pass their peak, net buying by pension funds will continue," adding, "The possibility of a reversal in supply and demand for foreigners is also valid if the won stabilizes." Researcher Lee further predicted, "Net buying by pension funds will act as a safety net, and changes in foreign supply and demand will determine not only KOSPI fluctuations but also the intensity of declines and the resilience of rebounds." The analysis suggests that if the KRW/USD exchange rate stabilizes downward in the first half of this year, the atmosphere for the KOSPI will also turn around depending on the net buying of pension funds and foreigners.
Among various stocks, it is time to pay attention to those that are undervalued, have been excessively oversold, and are seeing continuous capital inflow. Researcher Lee Kyung-min projected, "Both in terms of earnings and stock price, once market stability increases, the attempt by undervalued sectors—relative to their performance—to rebound will become more pronounced."