[Good Morning Stock Market] Will KOSPI Aim for Its Previous High Again?

On the 20th, the KOSPI index, KRW-USD exchange rate, and KOSDAQ index are displayed on the electronic board in the dealing room of Hana Bank in Euljiro, Jung-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Park Ji-hwan] The KOSPI index fell below 3200 just one day after surpassing the 3220 mark to reach an all-time high. Foreign investors, who had been driving the index with continuous net buying, sold off more than 1 trillion won, and institutions also showed net sales in the trillion-won range, fueling the index's decline. On the 22nd, experts predicted a high possibility of a rebound, noting that the previous day's decline in the domestic stock market was somewhat excessive.

◆ Yumi Kim, Economist at Kiwoom Securities = The Korean stock market is expected to attempt a rebound as low-price and technical buying flows in, amid the perception that the sharp decline in the previous trading day was excessive. As President Biden mentioned, the global vaccine supply shortage remains, so concerns about economic delays due to the resurgence of COVID-19 in emerging countries have not been resolved.

However, since the COVID-19 issue has been a factor exposed for a long time, its impact on the stock market is expected to diminish over time. The calming of COVID-19 in advanced countries such as the U.S. and the acceleration of vaccine distribution are also factors that will reduce COVID-19's influence on the stock market. The domestic market needs to focus on whether COVID-19-affected stocks and cyclical stocks rebound, similar to the U.S. stock market on the previous day.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = Overnight, the U.S. stock market saw major tech stocks fall about 1% due to Netflix's (-7.40%) sharp drop after its earnings announcement. The market opened lower amid concerns over the resurgence of COVID-19 in countries including Japan. However, after the White House announced confidence in the COVID-19 vaccine, expectations for economic normalization were highlighted again, leading to a successful shift to gains. News that the Biden administration will propose an additional $1 trillion stimulus package also contributed to the rise.

In the domestic market, the rise in the U.S. stock market due to expanded vaccine inoculation and expectations for additional stimulus measures is expected to positively influence investor sentiment. A rebound from the previous day's decline is anticipated. Considering the Russell 2000 index, a U.S. small-cap index, rose 2.35%, and the Philadelphia Semiconductor Index increased by 2.75%, risk asset preference sentiment is expected to spread. Attention should be paid to sectors that showed strength in the U.S. market, such as electric vehicles, secondary batteries, semiconductor equipment, and solar energy.

◆ Yujun Choi, Researcher at Shinhan Financial Investment = The previous day's decline in the domestic stock market was influenced by profit-taking pressure following the global stock market's upward trend and concerns over the resurgence of COVID-19 in Japan. U.S. Treasury yields also fell, triggering risk aversion sentiment at the KOSPI's peak, resulting in a 1.5% drop. This year, foreign investors have net sold over 1 trillion won on five trading days. This period coincides with the market peak at the end of January and the time of sharp volatility in interest rates in February. The current situation is considered similar to January. The KOSPI has risen on 13 out of 15 trading days in April, so some profit-taking pressure may be at work. Valuation pressure has decreased, currently at about 13.2 times compared to 14.4 times in January. While it is necessary to monitor foreign investor supply and demand amid noise, a limited weakness is expected.