[Weekly Market Review] Returning Oeg-in, KOSPI Approaching Pre-COVID-19 Levels

Surpassing 2190 During the Week... Foreigners Turn to Buying
Institutions Also Record-Breaking Net Purchases... Samsung Electronics Rises 6% After Sideways Movement

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The selling trend by foreigners that lasted for three months has begun to shift to buying. The KOSPI, which started the week in the 2000 range, has steadily risen and is now on the verge of breaking through the 2200 level. This means it has recovered to the level before the full-scale spread of the novel coronavirus (COVID-19).

According to the Korea Exchange on the 6th, the KOSPI closed this week (1st to 5th) at 2181.87, up 7.5% (152.27 points) from the last trading day of the previous week (29th). Expectations for the reopening of major economies have outweighed concerns over the US-China trade conflict surrounding the Hong Kong National Security Law and the anti-Black racism protests triggered in the US.

This trend had already begun in the US New York stock market. On the 2nd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 25,742.65, up 1.05% (267.63 points) from the previous session. The S&P 500 index rose 0.82% (25.09 points) to 3,080.82, and the Nasdaq index closed up 0.59% (56.33 points) at 9,608.37.

Amid this atmosphere, the domestic stock market showed a steady upward trend from the beginning of the week. On the 3rd, the market surpassed the 2100 mark during trading for the first time since February 25. Samsung Electronics and SK Hynix, which had been stagnant, rose more than 6%, while Hyundai Motor and Hyundai Mobis also led the rally with gains of 4-5%. Recently sharply rising NAVER and Kakao fell about 3%.

Record-breaking figures poured in as well. On that day’s market close, the trading value on the KOSPI market was about 16.8057 trillion won, the largest ever. This broke the previous record of 14.4792 trillion won set on the 28th of last month in just four trading days. The total trading value combining the KOSPI and KOSDAQ markets was also a record high at 28.1804 trillion won.

Institutional investors also joined the record-breaking buying spree. They net purchased 1.1595 trillion won that day, marking the third-largest daily net buying record ever. Individual investors net sold 1.3286 trillion won, realizing profits. This was the largest net selling volume in 7 years and 9 months since September 14, 2012, when it was 1.451 trillion won, ranking fourth all-time.

On the 4th, an early morning rise was also observed. The market rose to 2191.00 shortly after opening, the highest level since February 21. This means it recovered to the level before the full-scale spread of COVID-19. However, in the afternoon, many profits were taken, and the market closed up at 2151.18. The index’s rise was limited due to intensified frictions such as the suspension of US-China flights and profit-taking following the previous day’s sharp rise. Kiwoom Securities researcher Sangyoung Seo analyzed, "The domestic market started rising as the US stock market showed signs of economic recovery with improved employment indicators, but sales emerged as frictions intensified with reports just before the US market close about China partially canceling purchases of US agricultural products and the suspension of US-China flights."

On the last trading day of the week, the 5th, the market showed an upward trend again, closing at 2181.87. The KOSDAQ, which had been somewhat sluggish compared to the KOSPI, also closed at 749.31 that day, the highest closing level since May 7 of last year. Yuanta Securities researcher Hujeong Kim explained, "Foreigners, who had been net sellers in the domestic market for over three months due to weakened investor sentiment and a strong dollar, have increased net buying centered on large-cap stocks since the end of last month. As the spread of COVID-19 slowed, expectations for economic reopening rose, and factors such as a weaker dollar and liquidity expansion through subsidies from countries worldwide also had a positive effect."