KOSPI Rises Over 1% to Recover to 3170 Level Amid Taiwan Stock Market Recovery

Taiwan Weighted Index Rises Over 3% in Early Trading
Institutional Net Buying Also Influences Strength
"Correction Phase Expected to Continue for a While"

On the 18th, employees are working in the dealing room at the Myeongdong Hana Bank headquarters in Jung-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The KOSPI index rose more than 1%, recovering to the 3170 level, driven by continued buying from institutional investors. This appears to be influenced by the Taiwan stock market, which has recently shown a strong correlation and recovered by more than 3%.

As of 11:04 AM on the 18th, the KOSPI stood at 3174.01, up 1.26% from the previous day. After opening slightly higher at 3135.38, the upward momentum has been expanding.

Institutional buying led the index's rise. At the same time, institutional investors made net purchases worth 594.7 billion KRW, the largest since 970.5 billion KRW on the 10th. Conversely, foreigners and institutions made net sales of 8.9 billion KRW and 513.3 billion KRW, respectively.

Most sectors showed gains. The steel and metal sector posted the largest increase at 4.28%, followed by construction (2.92%) and banking (2.28%). Meanwhile, medical precision (-1.58%) and paper and wood (-1.31%) sectors declined.

The KOSDAQ market also showed an upward trend, rising 0.60% to 968.31 compared to the previous day. After a slightly higher start, it briefly reversed to a decline in the early session but soon rebounded.

Institutions and foreigners made net purchases of 34.1 billion KRW and 39.9 billion KRW, respectively, while individuals made net sales of 64.0 billion KRW.

Several sectors also rose. Digital content (2.15%), entertainment and culture (1.20%), and IT software & services (1.18%) led the gains. Transportation (-1.76%) and publishing & media replication (-0.86%) sectors declined.

The recent recovery of the Taiwan Weighted Index, which has shown a strong correlation with the domestic market, is interpreted as having a positive impact. Jaeseon Lee, a researcher at Hana Financial Investment, explained, "The Taiwan stock market, which has a large IT sector weight similar to the domestic market, recently experienced a significant correction, causing the domestic market to hesitate. The Taiwan Weighted Index, which opened at 10 AM Korean time, showed a recovery of over 3% in the early session, and the renewed buying in sectors such as steel that had been under correction contributed to the domestic market's rebound."

However, there are also analyses suggesting that it will be difficult for the market to maintain a steady upward trend going forward. Given the remaining domestic and international uncertainties, a correction phase is expected for the time being. Hyoseok Lee, a researcher at SK Securities, said, "Uncertainties remain, including the Korea-US summit on the 21st and the US government-led semiconductor meeting on the 20th involving Samsung Electronics. The US Federal Reserve (Fed) is also continuously monitoring inflation concerns, so a market with repeated fluctuations is expected to continue for the time being."