[Weekly Market Review] "Buying on every dip"... Selling Inverse, Buying SK Biopharm, NAVER, and Kakao

SK Biopharm, which recorded a 'ttasang', becomes the top net buyer as stock price falters
Steady accumulation of NAVER and Kakao amid earnings expectations
Jumping to 3rd and 7th in market cap respectively

[Asia Economy Reporter Oh Ju-yeon] Ahead of the earnings season, following securities firms' analysis that a differentiated market by individual stocks rather than indices will prevail, capital is flowing into stocks expected to show earnings improvement in the second quarter. In particular, individual investors who had been pouring large sums into inverse exchange-traded funds (ETFs), which profit when the index falls, until last week have completely reversed direction, selling off inverse ETFs and instead adding Kakao and NAVER to their portfolios. Additionally, buying interest has surged in SK Biopharm, which had hit consecutive upper price limits since its listing. As the upward rally paused and prices stalled, it appears that accumulation is underway.

[Image source=Yonhap News]

According to the Korea Exchange on the 11th, in the first week of July (6th?10th), the stock most purchased by individuals in the KOSPI market was SK Biopharm, with net buying worth 483.8 billion KRW. SK Biopharm recorded the so-called 'ttasang' (opening price set at double the IPO price, followed by hitting the upper price limit) after its listing on the 2nd, fueling strong investment enthusiasm among individuals. Although prices showed weakness toward the end of the week, maintaining the 200,000 KRW range is largely attributed to individual investors.

However, concerns about investor damage due to overheating are also being raised. Researcher Ha Tae-gi of Sangsangin Securities pointed out, "Before SK Biopharm's listing, the market consensus for its market capitalization was 5 to 6 trillion KRW, and even considering the IPO premium, it was expected to be 7 to 8 trillion KRW, but the actual market cap greatly exceeded this," adding, "This reflects the overheating phenomenon in biotech stocks."

Alongside this, the stocks heavily net purchased by individuals were NAVER and Kakao. In the first week of July, individuals bought NAVER and Kakao worth 282 billion KRW and 257.6 billion KRW, respectively.

Supported by such buying demand, NAVER reached an intraday high of 308,500 KRW on the 9th, setting a 52-week high. Its market capitalization also surpassed 50 trillion KRW intraday, eventually overtaking Samsung Biologics (48.3666 trillion KRW) to rank third in market capitalization on the KOSPI market (49.1147 trillion KRW).

Kakao also rose to an intraday high of 368,000 KRW, marking a 52-week high and securing the 7th position in market capitalization.

They have established themselves as leading stocks in the market by benefiting from the untact (non-face-to-face) trend following COVID-19. Their earnings growth trend is expected to continue. Performance-based advertising and shopping search ads within mobile platforms are expected to maintain stable revenue growth without significant impact, and the growth momentum in commerce and payment businesses is also anticipated to continue due to increased non-face-to-face consumption.

For Kakao, operating profit in the second quarter of this year is estimated to have increased by 135.0% year-on-year to 95.2 billion KRW, with sales rising 24.7% to 913.9 billion KRW. NAVER is expected to see operating profit grow 76.8% year-on-year to 226.8 billion KRW, and sales increase 11.1% to 1.8121 trillion KRW.