Foreigners and Institutions Boost Net Buying... KOSPI Rebounds Over 2%

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] The KOSPI is showing a rise of over 2% as foreigners and institutions increase their net buying volume.

As of 10:17 AM on the 25th, the KOSPI stands at 3,058.22, up 2.10% (62.94 points) from the previous trading day. The index opened the session at 3,026.47, up 1.05% (31.49 points) from the previous day. In the early part of the session, individuals increased their net buying, but currently, foreigners and institutions are purchasing stocks.

Looking at investor trends, foreigners and institutions have bought stocks worth 170.8 billion KRW and 73.5 billion KRW respectively. Individuals alone sold stocks worth 247.8 billion KRW.

By sector, the largest gains were seen in Medical Precision (4.26%), Chemicals (2.73%), Electrical & Electronics (2.53%), and Pharmaceuticals (2.35%). In the Medical Precision sector, Dentium expanded its gains, reflecting expectations for growth in the Chinese implant market, which is in the 9% range. In the Electrical & Electronics sector, SK Hynix led the index rise with an intraday increase of 6%. Positive outlooks on the semiconductor industry and the signing of an EUV scanner contract positively influenced the stock price.

Among the top market capitalization stocks, most showed gains. Samsung Electronics recorded 83,500 KRW, up 1.95% from the previous day. NAVER (1.3%), LG Chem (2.21%), Hyundai Motor (1.28%), and Samsung Biologics (1.61%) also rose.

The KOSDAQ index at the same time stood at 923.33, up 1.88% (17.02 points) from the previous day. The index opened at 910.15, up 0.42% (3.84 points). While individual buying momentum is increasing, foreigners and institutions sold stocks worth 25.3 billion KRW and 38.4 billion KRW respectively. Individuals purchased stocks worth 71.2 billion KRW.

By sector, the largest gains were in Non-metallics (3.78%), Distribution (3.08%), Semiconductors (3.05%), and Chemicals (2.86%). Among the top market capitalization stocks, Pearl Abyss and HL Biotech fell by 0.9% and 0.32% respectively. Celltrion Healthcare (3.6%), Celltrion Pharm (4.4%), Kakao Games (0.19%), Alteogen (9%), and EcoPro BM (1.4%) rose.

China Deleveraging, Hong Kong Stamp Duty Increase, and Continued Interest Rate Uncertainty: "Stock Price Adjustment Process"

The domestic stock market is mixed with expectations that the global economy will recover fully after COVID-19 and sensitivity to tightening policies. Although Federal Reserve Chairman Jerome Powell made dovish (monetary easing) remarks, it seems that all inflation burdens have not disappeared. The previous day, the US 10-year Treasury bond rose slightly, reflecting the impact of a proposed additional stimulus package worth 1.9 trillion USD.

Other negative factors have also been reflected in the stock market. Earlier, the Hong Kong government announced an increase in the stock transaction stamp duty from 0.1% to 0.13% to secure tax revenue. In the relatively advanced recovery region of China, the People's Bank of China has started liquidity withdrawal through open market operations, further heightening domestic market concerns.

However, unless major countries' banks break away from their existing monetary easing frameworks, downward pressure on stock prices is expected to be limited. The US Fed, European Central Bank, and People's Bank of China have all stated their intention to maintain the current monetary policy stance. Soeun Ahn, a researcher at IBK Investment & Securities, said, "Since tightening adjustments have not fully materialized and the elevated inflation or interest rate levels do not significantly damage the economy or corporate profits, downward pressure on the stock market will not be large."

Junghoon Seo, a researcher at Samsung Securities, said, "Although domestic supply and demand conditions have worsened, causing noticeable downward pressure on the stock market, considering the rise since the COVID-19 pandemic, this should be seen as an extended adjustment process. We should focus on the valid expectations for economic recovery and the fact that liquidity conditions remain favorable despite rising interest rates."