[Weekly Market Review] KOSPI Mixed Amid Expectations for COVID-19 Treatment and Concerns over US-China Relations Deterioration

[Image source=Yonhap News]

[Asia Economy Reporter Koo Eun-mo] The KOSPI experienced a week mixed with expectations for a novel coronavirus (COVID-19) treatment and concerns over the worsening relationship between the United States and China surrounding the enactment of the Hong Kong National Security Law.

According to the Korea Exchange on the 30th, this week (25th-29th), the KOSPI closed at 2,029.60 points, up 59.47 points (3.02%) compared to the previous week. After repeated gains during the week and a pause on Friday (22nd), finishing the week around the 1,970 level, the KOSPI started the week on Monday the 25th with a rise driven by expectations for economic normalization and COVID-19 vaccines. As major countries continued to reopen their economies, optimism grew around the COVID-19 vaccine from the U.S. biotech company Moderna, leading to gains. However, conflicts over the Hong Kong National Security Law and U.S. sanctions against Chinese companies intensified U.S.-China tensions, acting as a burden.

On the 26th, the KOSPI exceeded the 2,000 mark as institutional and foreign investors improved their sentiment and net bought shares, supported by rising U.S. index futures amid ongoing expectations for global economic reopening and COVID-19 vaccine prospects. On Wednesday the 27th, despite profit-taking selling, the KOSPI closed slightly higher, buoyed by strong U.S. index futures. While profit-taking emerged mainly in non-face-to-face and secondary battery-related stocks that had shown strong gains, shipbuilding stocks rose following news that Visit Kyu, president of the Export-Import Bank of Korea, increased plans for funding to shipbuilders.

On the 28th, after three days of gains, the index closed lower as concerns about the economy and U.S.-China conflicts came to the forefront. The Bank of Korea lowered its economic growth forecast for this year, expanding economic uncertainty, and China submitted the Hong Kong National Security Law to a vote at the National People's Congress, highlighting U.S.-China tensions and causing the index to fall. However, expectations for an improvement in the semiconductor industry were reflected following an upward revision of earnings forecasts by U.S. semiconductor company Micron, supporting the index's downside as electrical and electronics sectors such as Samsung Electronics and SK Hynix rose.

On Friday the 30th, concerns over U.S.-China conflicts surrounding the enactment of the Hong Kong National Security Law continued from the previous day, causing the market to move sideways before closing the week at 2,029.60, up 1.06 points (0.05%) from the previous trading day. This week in the KOSPI market, institutional and individual investors net bought 485.9 billion KRW and 32.9 billion KRW respectively, while foreign investors net sold 680.9 billion KRW.

The KOSDAQ index also ended at 713.68 points, up 5.1 points (0.72%) from the previous week. During this period, individual and foreign investors net bought 542.6 billion KRW and 74.9 billion KRW respectively in the KOSDAQ market, while institutional investors net sold 449.4 billion KRW.