KOSPI Maintains Uptrend... "Airline and Construction Cyclical Stocks Up"

Increase in Net Buying Volume by Foreign Investors

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] As expectations for a breakthrough in negotiations on the US infrastructure investment bill rise, the domestic stock market is showing an upward trend. Sectors related to economic normalization, such as aviation and construction, are notably rising.

At 10:16 AM on the 2nd, the KOSPI stood at 3,236.26, up 0.44% (14.71 points) from the previous trading day. The KOSPI opened at 3,224.40, up 0.08% from the previous day, and surged to 3,241.07 during the session. Looking at investor trends, foreign investors are increasing their buying. Foreigners alone purchased stocks worth 144.9 billion KRW, while individuals and institutions sold stocks worth 47 billion KRW and 87.2 billion KRW, respectively.

By sector, airline stocks rose sharply by 3.15%. T’way Air surged about 27%, and Jin Air (8%), Jeju Air (7.8%), Korean Air (7.1%), Hanjin KAL (5.7%), and Korea Airports Corporation (4.7%) also increased. This is analyzed as reflecting expectations that travel demand could significantly increase due to the expansion of COVID-19 vaccinations. Looking at the US case, during the Memorial Day holiday from the 28th to the 31st of last month, the average daily number of air passengers was 1.78 million, the highest level since the COVID-19 outbreak last year.

Additionally, reflecting expectations for economic normalization, machinery (2.11%), construction (1.82%), and steel & metals (0.82%) sectors also showed upward trends.

Most of the large-cap stocks are declining. SK Hynix (-0.78%), NAVER (-0.41%), LG Chem (-0.73%), Samsung Biologics (-0.84%), Samsung SDI (-0.32%), and Celltrion (-1.10%) also fell. Samsung Electronics is up 0.62% from the previous day, standing at 81,100 KRW.

The KOSDAQ index, which turned down in the early session, is showing a slight upward trend. Currently, the KOSDAQ index is at 983.64, down 0.10% (0.95 points) from the previous day. Looking at investor trends, foreigners and institutions sold stocks worth 68.2 billion KRW and 13 billion KRW, respectively, in the KOSDAQ market. Individuals alone bought stocks worth 88.3 billion KRW.

By sector, cement-related sectors (2.53%), construction (1.69%), and transportation (1.52%)?all economically sensitive stocks?showed notable gains. Sampyo Cement (3.3%) and Korea Cement (2.8%) maintained upward trends, and Dongwon Development (4.3%) and Seohui Construction (3.3%) also rose.

Most of the large-cap stocks are declining. Celltrion Healthcare (-0.75%), Celltrion Pharm (-0.86%), EcoPro BM (-0.34%), HLB (-3.35%), and CJ ENM (-0.30%) also fell. On the other hand, Pearl Abyss (0.34%) and Kakao Games (0.19%) rose.

Although concerns have increased as Fed Board member Brainard, who is emerging as the next Federal Reserve chair, made remarks about inflation worries, the market seems to be reflecting expectations for economic normalization more strongly. In particular, at the regular meeting yesterday, OPEC+ maintained a gradual easing of production cuts but forecasted clear signs of demand recovery due to the economic recovery of major countries, which is expected to support the index rise.

Sangyoung Seo, a researcher at Kiwoom Securities, said, “With international oil prices hitting a two-year high and rising expectations for a US infrastructure investment deal, a favorable environment has been created for the domestic stock market,” adding, “In today’s market, value stocks such as economically sensitive stocks are expected to show strength amid differentiation, while profit-taking selling may emerge.”