Ants 'Decline' Big Players 'Rise'... Divergent Investment Sentiment

Individual Investors Buy 'Inverse' Products
"Now is the Peak" Perception, Selling Frenzy
Foreigners and Institutions Expect Further Rise
'Leverage' Bought 148.9 Billion KRW Yesterday

Stock Market: "Uncertainty Disappeared"
Foreign Inflow Expected Due to Won Strengthening

[Asia Economy Reporter Minji Lee] As Joe Biden, the Democratic candidate, is confirmed to win the U.S. presidential election, the domestic stock market has surpassed the 2400 mark, but individual investors are betting on index inverse products. This is because there is a growing perception, based on experience, that the 2400-2450 range is a peak, and they expect the index to slip again. On the other hand, foreigners and institutions are betting on index leverage products. With the uncertainty of the presidential election lifted, they foresee the KOSPI moving upward.

Individuals Bet on Inverse, Foreigners and Institutions on Leverage

According to the Korea Exchange on the 6th, individual investors have purchased the most of 'KODEX 200 Futures Inverse 2X' this month, amounting to 398.9 billion KRW. On the previous day alone, they bought 256.8 billion KRW worth, expanding their investment sentiment toward a decline in the index. 'KODEX Inverse' was also the second most purchased stock that day, with 41.7 billion KRW bought.

As the perception that "now is the peak" spreads, individuals are also putting stocks on the market for profit-taking. They have maintained net selling for four consecutive trading days this month, selling a total of 2.5437 trillion KRW. By stock, Samsung Electronics was the most sold, with individuals net selling 424.3 billion KRW. This was followed by LG Chem (360 billion KRW), KODEX Leverage (340 billion KRW), Samsung SDI (242 billion KRW), and Samsung Biologics (238.2 billion KRW) in order of sale volume.

The reason individuals emphasize a decline is interpreted as their expectation that the domestic stock market will not easily break through the 2400-2450 range. The KOSPI surged about 6.5% from 2267.15 to 2413.79 this month, reclaiming the 2400 level, and they expect a correction. In September, when the KOSPI approached the 2450 level, individuals also prepared for a decline by accumulating 240 billion KRW worth of 'KODEX Inverse Leverage' until the 20th of that month.

Conversely, foreigners and institutions believe the index can rise further at this point. They bet on 'KODEX Leverage' products, buying stocks worth 148.9 billion KRW on the previous day alone, with institutions purchasing 139.7 billion KRW and foreigners 9.2 billion KRW. They also bought 15 billion KRW worth of 'KODEX 200' with the same composition. Regarding the KOSDAQ index, which is already above 850, they also expect further gains. Institutions bought 24.5 billion KRW worth of 'KODEX KOSDAQ150 Leverage,' and foreigners net purchased 3.3 billion KRW and 3.2 billion KRW worth of 'KODEX KOSDAQ' and 'TIGER KOSDAQ150,' respectively.

"Uncertainty Lifted" Majority Forecast KOSPI Rise

In the securities industry, there is a consensus that with the uncertainty of the U.S. presidential election gone, the market may show an upward trend for the time being. Since foreign inflows into the domestic stock market are expected, attention should be paid to foreign investors' movements going forward. The biggest reason for expecting foreign inflows is the won's strength due to the dollar's weakness. With Biden's increasing likelihood of winning the U.S. election, the current won-dollar exchange rate has fallen below 1,130 KRW. The yuan's continued strength also suggests that the won's strength will be maintained for some time.

Ha In-hwan, a researcher at KB Securities, explained, "The dollar's weakness will continue because the stimulus package will inevitably be agreed upon, and the U.S. M2 money supply growth rate still exceeds that of the Eurozone. It is also important to consider that during periods of yuan strength, there has always been large-scale capital inflows into emerging market and Korea-related ETFs."

Although President Trump has filed various lawsuits, some opinions suggest the market will not take this seriously. Kim Dae-jun, a researcher at Korea Investment & Securities, said, "The current market environment allows continued expectations for foreign buying, and the KOSPI could reach up to 2,480 points. However, since the Republican Party is likely to secure the Senate, we need to carefully watch comments from Republican lawmakers regarding additional economic stimulus policies."