[Weekly Market Review] KOSPI Stuck in a Box Range Amid US Presidential Election Uncertainty

[Asia Economy Reporter Oh Ju-yeon] In the third week of October (19th to 23rd), the KOSPI showed limited movement within a narrow range due to uncertainties surrounding the U.S. presidential election and concerns over the resurgence of COVID-19. The KOSDAQ index continued its decline from the previous week, falling to the low 800s. Analysts suggest a conservative approach is necessary as unpredictable situations such as election result disputes may arise even after the election.

According to the Korea Exchange on the 24th, the KOSPI closed at 2,360.81 on the 23rd, moving within a narrow range from 2,346.74 on the 19th. By investor type, individual investors sold a net 967.6 billion KRW worth of stocks, while foreigners and institutions bought net amounts of 21.7 billion KRW and 941.2 billion KRW, respectively.

The top stocks by net buying for individuals included Kakao, Samsung Biologics, NAVER, KODEX 200 Futures Inverse 2X, Asiana Airlines, LG Display, Samsung Electronics Preferred Shares, E-Mart, Samsung Electronics, and Korea Electric Power Corporation.

On the other hand, LG Chem, Shinhan Financial Group, POSCO, Green Cross, Hyundai Motor, SK Hynix, Hana Financial Group, KODEX Leverage, and KB Financial Group were among the top stocks sold by individuals.

Conversely, foreigners net bought LG Chem, Shinhan Financial Group, Celltrion, KODEX 200, LG Electronics, Hana Financial Group, Green Cross, and NH Investment & Securities. Institutions net bought Shinhan Financial Group, POSCO, Samsung Electronics, Hyundai Mobis, NCSoft, KB Financial Group, Lotte Chemical, Hana Financial Group, SK Telecom, Hyundai Department Store, and KODEX Leverage, showing a contrast to individual investors. Individuals leaned towards KOSPI decline, while foreigners and institutions supported KOSPI gains.

With the near collapse of the stimulus package before the U.S. presidential election, the stock market's upward momentum weakened, and the KOSDAQ market showed even weaker performance compared to the KOSPI market.

The KOSDAQ index, which was 822.25 on the 19th, closed at 807.98 on the 23rd, barely maintaining the 800 level. Additionally, if the threshold for imposing capital gains tax on stocks is lowered from the current 1 billion KRW to 300 million KRW starting next year, individual investors may sell off holdings ahead of year-end, which is considered a negative factor for the market.

Resolving political uncertainties surrounding the U.S. presidential election is seen as a prerequisite for the stock market to regain upward momentum.

Han Dae-hoon, a researcher at SK Securities, said, "Currently, the market highly anticipates Biden's victory, and actual polls show Biden leading. However, some battleground states are within the margin of error, so setting an investment strategy that bets prematurely on Biden's win may be hasty," adding, "Given the high uncertainty, it seems better to respond after seeing the election results rather than taking aggressive action."