Foreign investors, who have profited from the rally in advanced technology centered around artificial intelligence (AI) in the US and Japanese stock markets, are now investing in the Korean stock market. This is because it has an ecosystem of global semiconductor, automotive companies, equipment, and components with a strong AI backward effect. Coincidentally, Asian funds headed to India also flowed into the Korean stock market last year.
According to the Korea Exchange on the 6th, the money foreigners spent on net purchases in the Korean stock market, combining KOSPI and KOSDAQ, from January to February reached $8.42 billion. Most of the $10.4 billion foreigners spent in the seven major Asian countries (Korea, Taiwan, Vietnam, India, Indonesia, Philippines, Thailand) have flocked to Korea. Many funds were withdrawn from India, Vietnam, and Thailand during this period.
Major developed country markets such as the US and Japan have continued their “record high” march since the beginning of this year. Germany and France also skyrocketed, centered on tech stocks. The commonality of the stocks that led the rally is that they are export-oriented tech stocks that require an industrial complex ecosystem. Considering the major country markets, foreign investors point out Korea as a new promising investment destination, causing a “money move.”
Since March, foreign buying in Korea has been more aggressive. From the first day of this month to the 5th, foreigners net bought $751 million worth of KOSPI and KOSDAQ. Investors who took profits or are preparing for the “adjustment” that has begun or is on the horizon in developed markets consider Korea a promising new investment destination.
The protagonists in the AI boom are big tech giants in the U.S., advanced AI semiconductor micro-process manufacturing equipment makers, and AI-applicable software and car manufacturers in Europe. Japan also has many equipment and automotive companies, which are key to the semiconductor supply chain and participate in the global supply chain ecosystem.
Uniquely among Asian emerging markets, South Korea, like major developed economies, has built a manufacturing ecosystem and is connected to global supply chains in the semiconductor sector, which is essential for the development of advanced technologies such as AI, and in the automobile sector, which is becoming more electrified, including batteries. It’s time for the South Korean stock market and industry to demonstrate their potential globally.
Sangsangin Securities said, “The Korean stock market started to rise early this week with the Korean export index recovering during the holiday as expectations for a soft landing of the US economy are highlighted, restoring investor sentiment.” It added, “The stock prices of AI semiconductor-related companies such as Nvidia and AMD have surged, providing additional momentum for the Korean stock market as semiconductor sector stocks also rose in tandem.”
DAOL Financial Group explained, “2024 appears to be when global electric vehicle demand slows down on the surface. However, global OEM manufacturers are placing orders for new platforms from 2026 to 2027. Considering that the US currently has the lowest localization rate of car production among major countries worldwide, the investment opportunities for parts manufacturers in the North American region are quite large.”
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