[Weekly Market Review] Foreigners Buying 7 Trillion Won vs Retail Investors Trapped in 'Gobbus' Slump

[Asia Economy Reporter Oh Ju-yeon] In the last week of November (23rd to 27th), the domestic stock market soared past the 2600 mark, breaking record highs day after day. The KOSPI, which started at the 2560 level on the 23rd, surpassed the 2640 level intraday on the 25th, setting an all-time high. This was thanks to foreign investors who, after consistently selling every month since the outbreak of COVID-19, turned to net buying over 7 trillion won in November, driving the index upward. Conversely, individual investors sold off stocks worth 5 trillion won this month, switching to net selling for the first time this year on a monthly basis. The only stocks that individuals heavily bought after turning to selling this month were 'inverse' exchange-traded funds (ETFs) that bet on index declines.

[Image source=Yonhap News]

According to the Korea Exchange on the 28th, from the 2nd to the 27th, individual investors net sold stocks worth 5.023 trillion won, marking their first monthly net selling since the beginning of the year. In January and February, individuals net bought stocks worth 4.4 trillion won and 4.8 trillion won respectively. When the index plunged to the 1400 level in March, they swept up over 11 trillion won worth of stocks, engaging in bottom-fishing. They continued net buying at an average monthly scale of 3 to 4 trillion won, but switched to net selling this month, realizing profits on the stocks they had accumulated.

On the other hand, foreign investors have consistently been net sellers since March, when they net sold 12.55 trillion won worth of stocks. Except for July, they have been net sellers every month. However, in November, foreign investors scooped up stocks worth 7.43 trillion won, pushing the index up to the 2600 level.

The stocks most bought by foreigners this month were large semiconductor companies such as Samsung Electronics and SK Hynix, as well as leading secondary battery stocks like LG Chem and Samsung SDI. They net bought over 2.286 trillion won worth of Samsung Electronics shares and purchased 1.5 trillion won worth of LG Chem shares. SK Hynix ranked third in net purchases with 981.7 billion won, and Samsung SDI was bought for 417.6 billion won. They also poured 357.9 billion won into KODEX 200, which bets on index rises.

Meanwhile, the only stocks that individual investors who switched to selling added to their baskets were 'inverse' ETFs, which profit when the index falls. Individuals bought a total of 704.2 billion won worth of KODEX 200 Futures Inverse 2X ETF this month. Including KODEX Inverse (148.2 billion won), the total reaches approximately 850 billion won.

However, as the KOSPI rose more than 15% this month, the prices of inverse ETFs dropped by double digits. From an opening price of 4,400 won on the 2nd to a closing price of 3,195 won on the 27th, the price fell over 27%. Intraday on the 25th, it hit a 52-week low.

Han Dae-hoon, a researcher at SK Securities, said, "The KOSPI rose more than 15% in November, recording the highest monthly increase since January 2000. While there may be some speed adjustment due to the sharp rise, the trend is unlikely to change."

He added, "Foreign capital will support the market's downside. Although many key economic indicators will be released next week, sensitivity to individual stocks and sector-specific positive news is higher than to economic indicators."

Han also noted, "A rotation market is likely to continue for the time being. However, the Quadruple Witching Day scheduled for December 10 could bring higher volatility than usual, so caution is needed."