The surge in interest for artificial intelligence (AI) has led to an unprecedented influx of foreign investment into South Korean shares, marking the largest quarterly foreign inflow the country has seen. This trend is part of a wider global enthusiasm for AI-related stocks.
Foreign investors have poured a net $12.2 billion into South Korean stocks during the first quarter of 2024, with a significant focus on chipmakers like Samsung Electronics Co. (005930) and SK Hynix Inc. (000660), which are pivotal in the AI supply chain. Samsung Electronics attracted $4.1 billion, while SK Hynix drew in $1.3 billion of that investment.
This investment spree has boosted foreign ownership of the Kospi index to 34.42% by March 28, reaching its highest point since the second quarter of 2021, as per the Korea Financial Investment Association. Analysts from Goldman Sachs Group, including Timothy Moe, suggest there's potential for even more foreign capital inflows, especially considering the $50 billion that left the country between 2020 and 2022.
With the Kospi index gaining 4% in March, some investors might consider taking profits soon, according to Kyoung-Min Lee from Daishin Securities Co. However, the consensus is that global investors will continue to buy Korean stocks throughout the year, driven by the momentum in AI and a turnaround in the memory sector. SK Hynix has even predicted that the positive momentum in AI memory will continue into 2025.
