SK hynix is the most popular stock among foreign investors on the Seoul bourse, as they have raked in the stock throughout the year, according to the Korea Exchange (KRX), Sunday.

The KRX, the country’s sole securities exchange operator, said foreign investors have made a net purchase of 3.87 trillion won ($3.65 billion) as of Friday on shares of the microchip manufacturing arm of SK Group.

It added the figure accounted for 38.05 percent of net purchases amount of their 20 favorite stocks at the KOSPI market.

Some 42.84 percent or 304.24 million shares of SK Hynix were under foreign ownership as of Friday, up from 25.04 percent or 17.55 million shares on Jan. 2.

The enormous foreign purchase of SK hynix’s shares is in stark contrast to domestic institutional investors’ selling spree of the same firm’s shares.

During the period in question, institutional investors sold the highest number of SK hynix shares among firms listed on the KOSPI, according to the KRX.

The different approach taken by foreign and domestic investors is attributed to the discrepancy in the global outlook for the microchip industry next year.

Market observers are of the opinion that 2014 will mark a significant decline in the profits of the semiconductor industry given that it has reached a peak.

On the other hand, foreign investors are forecasting the steady end of the so-called “game of chicken” across the industry globally thus ushering in a new era of increased profits in the coming years. The term “game of chicken” refers to excessive competition and oversupply within the industry, consequently pushing down prices of the products. SK hynix posted its record-high operating profit of 1.16 trillion in the third quarter.

SK hynix shares closed at 35,300 won per share on Friday, sharply up from 26,600 won on Jan. 2.

“The domestic investors’ forecast is mainly based on past business performance of the firm, while foreigners have considered its potential into account,” said Kim Sung-in, a researcher at Kium Securities. “And I think local investors are likely to suffer from their decision.”

By: DocMemory
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