Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Foreign investors capitalize on Kakao stock dip amid investigation
Kim Beom-su, the founder of tech giant Kakao, appears at the Financial Supervisory Service (FSS) in Seoul, Monday, to be questioned over the firm's alleged stock manipulation in order to acquire SM Entertainment earlier this year. Newsis
By Lee Yeon-woo
As Kakao's stock price plunges below 40,000 won ($29.64) due to mounting legal challenges surrounding its management, foreign investors are displaying bullish momentum, net purchasing the tech giant's stocks for five consecutive days.
According to the Korea Exchange, foreign investors bought Kakao's shares worth 23.6 billion won from Oct.19 to Tuesday. Continuing this trend on Wednesday, they net purchased Kakao's share for the fifth consecutive trading day. It's believed that the recent significant drop has prompted buying at these lower prices.
This contrasts sharply with September, when foreign investors distanced themselves from Kakao. From Sept.1 to 30, they net sold shares worth 116.8 billion won.
Meanwhile, individual investors, who had consistently acquired Kakao shares despite previous price drops, began a net selling trend starting Monday. Between Monday and Wednesday, they offloaded Kakao shares amounting to 19 billion won.
As of Wednesday, Kakao's closing price stood at 38,950 won, reflecting a 1.64 percent decrease from Tuesday. Although the stock price had been on a downward trajectory since Oct.13, it experienced a brief rebound on Tuesday, likely due to the low-price buying momentum, but soon resumed its decline.
In comparison to this past February when the stock price was around the 70,000 won mark, it has seen a decrease of 40 percent this month. When compared to the 2021 high of 170,000 won, the current price represents just a quarter of that value.
The financial industry paints a bleak picture regarding the future of Kakao. Out of 11 securities firms that have published investment reports on Kakao, 10 have lowered their target stock prices. This is mainly due to anticipated lackluster third-quarter operating profits and the ongoing legal challenges facing its management.
"We anticipate a recovery in Kakao's stock price starting from next year when its structural reforms and the impact of new ventures fully materialize," said Oh Dong-whan, an analyst at Samsung Securities.