[Weekly Market Review] Kospi Jumps to 2400 After Presidential Election... Individuals Sold 3.3 Trillion Won in the First Week of November as Index Rose

[Asia Economy Reporter Oh Ju-yeon] The domestic stock market, which had stalled due to uncertainty before the U.S. presidential election, soared spectacularly in the first week of November. The KOSPI rose 100 points from the 2300 level to the 2400 level within a week, and the KOSDAQ index surpassed the 800 mark, reaching over 840.

With Democratic candidate Joe Biden gaining the upper hand, the uncertainty surrounding the "presidential election" has disappeared. However, variables such as President Donald Trump's potential refusal to concede and delays in additional economic stimulus measures remain, which could impact the rapidly rising stock market. Additionally, if the spread of the novel coronavirus infection (COVID-19) continues, it could burden the market, drawing attention. Amid this, domestic investors realized profits from selling last week and instead purchased inverse exchange-traded funds (ETFs) that profit when the index falls.

On the 6th, dealers are working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index started at 2,421.79, up 8.00 points (0.33%) from the previous trading day, maintaining a strong trend. Photo by Moon Honam munonam@

According to the Korea Exchange on the 7th, individuals have already sold stocks worth 3.3 trillion won in the KOSPI market this month. In particular, on the 5th, when news spread that Biden was likely to win the election and the market surpassed 2400, individuals net sold stocks worth 1.6218 trillion won in a single day.

Foreigners and institutions showed net buying trends in November, purchasing 1.9856 trillion won and 1.3425 trillion won worth of stocks, respectively.

The only stocks that individuals aggressively accumulated during the week of selling were inverse ETFs. Individuals poured 471.597 billion won into the KODEX 200 Futures Inverse 2X. As the KOSPI surpassed the 2400 level, it is interpreted that they are focusing on inverse ETFs, expecting another decline near the previous high point. The third highest net purchase was also KODEX Inverse, with a total of 61.4 billion won bought.

Other stocks within the top five included Hanwha Solutions (66.662 billion won), Hyundai Mobis (56.898 billion won), and Korea Electric Power Corporation (38.174 billion won).

On the other hand, the most sold stock was LG Chem, with 794.072 billion won sold, and Samsung Electronics, which surpassed 60,000 won, also sold 545.99 billion won, ranking second in net sales. The third in net sales was KODEX Leverage (37.485 billion won), followed by Samsung SDI, SK Hynix, Kakao, Samsung Biologics, NCSoft, and SK Chemicals, which were sequentially net sold.

Conversely, these stocks were among the top net purchases by foreigners and institutions. Foreigners bought LG Chem, Samsung Electronics, Samsung SDI, Kakao, NAVER, SK Hynix, SK Chemicals, and Samsung Biologics in that order. Institutions most heavily net purchased KODEX Leverage (354.3 billion won), followed by Samsung Electronics, SK Hynix, Samsung Biologics, Samsung SDI, Kakao, and LG Chem.

Meanwhile, some opinions have emerged noting that the market is recently shifting to one led by foreigners, drawing attention.

KB Securities analyzed that it is time to increase interest in foreign demand, which had been overlooked for a while due to being overshadowed by individuals.

Ha In-hwan, a researcher at KB Securities, mentioned, "On October 30, when foreigners net sold 978 billion won in KOSPI and individuals net bought 1.414 trillion won, the KOSPI plunged 2.6%. On November 5, when foreigners net bought 1.135 trillion won and individuals net sold 1.622 trillion won, the KOSPI rose 2.4%," adding, "The market's color is changing to be led by foreigners."

He noted, "The weakness of the U.S. dollar is unusual," and paid attention to the KOSPI trend if the won-dollar exchange rate, currently at the maximum drawdown (MDD) of -12%, falls further.

Researcher Ha said, "Among three past cases, two (2004?2005, 2008?2009) saw about a 40% rise over a year, and the other (2010?2011) saw about a 15% rise," forecasting, "Conservatively applying this to the current KOSPI, the 2780 level is possible." He explained that if the won strengthens further, the possibility of a stock market rise will be very high.

Conversely, if the won-dollar exchange rate rebounds from the current MDD (-12%) level (won weakening), the KOSPI trend was sluggish. Researcher Ha predicted, "In this case, the optimistic scenario is maintaining the current level, and the pessimistic scenario is a 20% decline."