Retail investors unload over 1 trillion won of Kospi stocks in May

A foreign exchange dealer reads news covering the announcements made by the Federal Reserve Chair Jerome Powell at Hana Bank in central Seoul on May 6. [YONHAP]

Retail investors unloaded more than 1 trillion won ($795 million) worth of Kospi stocks in May as the market continued to stay sluggish and central banks around the world push monetary tightening.

Retail investors net sold 1.003 trillion won worth of Kospi stocks in May, according to data from Korea Exchange. It was the first month this year in which they net sold Kospi stocks.

In the same month, foreign investors net purchased 128.3 billion won worth of Kospi stocks, while institutional investors net bought 663.4 billion won.

HMM was the most net sold stock by retail investors, unloading 426 billion won. It was followed by LG Energy Solution, Kia, LG Chem and KT&G.

Retail investors net bought 999.37 billion won worth of Samsung Electronics stocks, followed by LG Household & Health Care, LG Electronics, SK hynix and Kakao.

Unlike the rapid growth seen last year, markets are down double digits this year amid central banks’ hawkish monetary tightening, high inflation and the energy crisis caused by the Russia-Ukraine war that broke out in February.

Kospi reached a two-year low last month on May 12 to close at 2,546.8 points. Kospi retreated 10 percent this year.

Some analysts project Kospi to gradually recover, despite the strong indications by central banks to continuously raise rates throughout the year.

Kim Yong-ku, a strategist at Samsung Securities, projected Kospi to fall within the range of 2,500 points and 2,800 points in June on expectations of inflation peaking out in the second half. Lee Eun-taek, a strategist at KB Securities, projected Kospi to reach 3,000 points in the second half of this year, 8 percent lower than the initial projection of 3,250 points.

Lee expects the semiconductor sector to perform well.

“At a strategic meeting held at SK hynix headquarters on May 30, industry minister [Lee Chan-yang] said the strategy of fostering the semiconductor industry will be announced within the first half of this year,” Lee said in a report Tuesday.

Lee added announcements by semiconductor firms to make large investments following the inauguration of President Yoon Suk-yeol and U.S. President Joe Biden’s visit last month will make the private sector lead the semiconductor industry, supported by the government.

Samsung announced last month it will invest 450 trillion won over the next five years to accelerate the growth of the semiconductor, biopharmaceutical and other next-generation industries. SK vowed to invest 247 trillion won over the next five years, focusing on chips, batteries and biopharmaceuticals.

BY JIN MIN-JI [jin.minji@joongang.co.kr]