Institutional investors sold Samsung Electronics and SK Hynix heavily during the week of June 29-July 3, with Samsung Electronics falling 8.84% to 309,500 won and SK Hynix dropping 9.28% to 2,425,000 won. Foreign investors offloaded 8.74 trillion won of SK Hynix and 8.73 trillion won of Samsung Electronics, while institutions sold 515.8 billion won of SK Hynix but purchased 1.74 trillion won of Samsung Electronics. Market analysts attribute the selling to portfolio rebalancing, as semiconductor stock prices surged since the second half of last year, pushing holdings beyond predetermined allocation limits for large fund managers. Lee Kyung-soo, a researcher at Hana Securities, noted that foreign investors and pension funds face pressure to reduce Korean stock exposure from a global asset allocation perspective, creating potential for temporary semiconductor stock selling around second-quarter earnings announcements. Against this backdrop, Hana Securities identified 10 stocks with strong institutional selling over the past 3 months but improving earnings outlooks, including L&F, RF Materials, and Mirae Asset Securities, as candidates for institutional buying once the Samsung Electronics and SK Hynix concentration eases.
Institutional Investors Rebalance Portfolios Amid Semiconductor Stock Surge
According to the Korea Exchange, Samsung Electronics and SK Hynix closed the week at 309,500 won and 2,425,000 won respectively after declines of 8.84% and 9.28%. During this period, foreign investors net sold 8.74 trillion won of SK Hynix and 8.73 trillion won of Samsung Electronics. Institutions sold 515.8 billion won of SK Hynix but net purchased 1.74 trillion won of Samsung Electronics.
Market analysis indicates the foreign and institutional selling of Samsung Electronics and SK Hynix reflects portfolio rebalancing. Fund managers operating large-scale capital preset allocations for Korean stocks and semiconductor stocks, but semiconductor stock prices rose steeply from the second half of last year, estimated to have exceeded upper limits.
Lee Kyung-soo of Hana Securities stated that foreign investors and pension funds face the need to reduce Korean stock weightings from a global asset allocation perspective, creating the possibility of temporary semiconductor stock selling around Samsung Electronics and SK Hynix's second-quarter earnings announcements.
Hana Securities Identifies 10 Stocks Meeting Dual Criteria for July Strategy
Lee proposed an investment strategy leveraging the seasonal characteristics of July when institutional investor flows rotate. With first-half performance confirmed, the strategy targets stocks where institutions sold heavily, creating portfolio buying capacity.
Following Lee's guidance, analysis using FnGuide DataGuide identified 10 stocks meeting two criteria: institutional net selling exceeding 1% of market capitalization (based on closing prices) over the past 3 months (60 trading days), and 12-month forward earnings per share (EPS) consensus raised by 1% or more during June.
L&F Shows Steepest Forward EPS Revision Despite 33.97% Price Decline
Among the selected stocks, L&F, a secondary battery cathode material manufacturer, recorded the steepest forward EPS upward revision. The stock carries strong expectations for earnings improvement following mass production of lithium iron phosphate (LFP) cathode materials. However, the stock price fell 33.97% over the past 3 months.
Joo Min-woo, a researcher at NH Investment & Securities, stated that concerns about competitors potentially entering Tesla's cathode material supply chain from the fourth quarter of this year were reflected in the stock price, but noted the positive factor of LFP cathode material shipments to Samsung SDI starting in the second half.
RF Materials Records Strongest Institutional Selling at 14.93% of Market Cap
RF Materials, which manufactures compound semiconductor packages, experienced the strongest institutional net selling over the past 3 months among the selected stocks. The company recently gained inclusion in the optical communication theme related to artificial intelligence (AI) expansion. Its position as a product supplier to Lumentum, a global optical communication and laser company, has been significantly highlighted.
RF Materials' stock price fell 28.14% over the past 3 months. Institutions sold 61.8 billion won worth during this period. The institutional net selling scale reached 14.93% of the market capitalization (414.1 billion won). However, Kim Jung-chan of Korea Investment & Securities analyzed that growth potential has not been sufficiently reflected in the stock price.
Mirae Asset Securities Falls 34.82% Over Three Months on Profit-Taking
Mirae Asset Securities, previously highlighted as a representative beneficiary of stock market boom conditions, appeared among stocks with excessive decline and vacant institutional demand. Mirae Asset Securities' stock price fell 34.82% over the past 3 months, the largest decline among the selected stocks. The result combined profit-taking after sharp gains on SpaceX-related expectations with extreme investor sentiment concentration toward semiconductors.
Kang Seung-gun of KB Securities stated that while the risk exists of net income volatility expanding according to SpaceX stock price movements, positive factors include the decision to purchase approximately 300 billion won of treasury shares to implement the previously announced shareholder return plan, and the rise in profit levels due to expanded profit contribution from brokerage, retirement pension, and wealth management (WM) divisions.
FAQ
Why did institutional investors sell Samsung Electronics and SK Hynix during the week of June 29-July 3?
Market analysts attribute the selling to portfolio rebalancing. Fund managers preset allocations for Korean stocks and semiconductor stocks, but semiconductor stock prices rose steeply from the second half of last year, estimated to have exceeded upper limits. Lee Kyung-soo of Hana Securities noted that foreign investors and pension funds face pressure to reduce Korean stock exposure from a global asset allocation perspective.
What criteria did Hana Securities use to select the 10 stocks for July investment strategy?
The 10 stocks met two criteria: institutional net selling exceeding 1% of market capitalization (based on closing prices) over the past 3 months (60 trading days), and 12-month forward earnings per share (EPS) consensus raised by 1% or more during June. The selected stocks include L&F, RF Materials, and Mirae Asset Securities.
Why did L&F's stock price fall 33.97% despite the steepest forward EPS upward revision?
Joo Min-woo of NH Investment & Securities stated that concerns about competitors potentially entering Tesla's cathode material supply chain from the fourth quarter of this year were reflected in the stock price. However, he noted the positive factor of LFP cathode material shipments to Samsung SDI starting in the second half.
