KOSPI Loses Energy with Sector Rotation... Institutions and Foreigners Sell While Individuals Net Buy 1 Trillion Won Already

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 4th, the domestic stock market started lower and continued to move sideways. It lost momentum due to the rise in U.S. Treasury yields. Foreigners and institutions, with a 'selling' bias, are holding back the KOSPI's rise. Individual investors are buying alone, looking for low-price buying opportunities.

As of 10:57 a.m. on the day, the KOSPI was at 3,051.48, down 1.02%. The KOSDAQ was at 922.52, down 0.89%. The KOSPI opened at 3,076.88, down 6.11 points (0.20%). The KOSDAQ started at 929.09, down 1.71 points (0.18%). This was influenced by the decline in the New York stock market due to concerns over rising U.S. Treasury yields. On the 3rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,270.09, down 121.43 points (0.39%) from the previous session. The Standard & Poor's (S&P) 500 index recorded 3,819.72, down 50.57 points (1.31%). The Nasdaq index, focused on technology stocks, closed at 12,997.75, plunging 361.04 points (2.7%). The decline in the New York stock market was driven by U.S. Treasury yields. As U.S. Treasury yields rose again, investor anxiety was triggered. The 10-year U.S. Treasury yield approached 1.5% at one point during the session. As the market closed, it traded around 1.47%. This is a significant increase compared to the early 1.4% level the previous day.

Only individual investors are net buyers alone. Individuals are net buying 1.0705 trillion KRW in the securities market and 183.8 billion KRW in the KOSDAQ market. On the other hand, foreigners and institutions are showing a selling bias. Foreigners are net selling 198.1 billion KRW in the securities market and 110 billion KRW in the KOSDAQ market. Institutions are also net selling 872.3 billion KRW and 70.6 billion KRW respectively in both markets.

Most sector stocks are declining. Due to the lack of additional upward momentum, the market is showing individual stock trends. Among the top market capitalization stocks, POSCO is showing a clear upward trend. It surged to 318,000 KRW, marking a 52-week high. This is interpreted as a rise in stock price due to earnings expectations. POSCO's cumulative sales of lithium deposits at the 'Hombre Muerto' salt lake in Argentina, acquired in 2018, are expected to reach 35 trillion KRW. The Celltrion trio is also on the rise following news that the European Medicines Agency (EMA) is reviewing the emergency use of the COVID-19 treatment Regkirona.

Seo Sang-young, a researcher at Kiwoom Securities, said, "The U.S. stock market fell again, using the rise in yields as an excuse to sell technology stocks and some theme stocks with high value burdens, which is a burden," adding, "The rise in U.S. Treasury yields could ultimately burden foreign demand in emerging market stocks." He further predicted, "Considering this, the Korean stock market is expected to start lower and continue a sector-differentiated market, similar to the characteristics of the U.S. stock market."

Researcher Na Joong-hyuk and Lee Kyu-hee of Hana Financial Investment said, "Asset market participants are expected to respond more sensitively to commodity prices, inflation-related economic indicators, and long-term bond yield trends for the time being," adding, "A neutral view on major asset classes should be maintained."