'KOSPI Rise' Foreigners Sell Without Thought... Eventually Close Lower Due to Downward Pressure

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] The KOSPI, which had reached an all-time high based on the previous day's closing price, closed lower on the 8th. It faced downward pressure due to strong profit-taking desires, fluctuating within a narrow range throughout the day. Uncertainty surrounding the U.S. consumer price index announcement and the upcoming options expiration date seemed to have intensified cautious market sentiment.

On the day, the KOSPI closed down 4.29 points (-0.13%) at 3247.83, compared to the previous trading day (3252.12). The index started at 3251.83, down 0.29 points (0.01%).

Looking at investor trends, individuals and foreigners led the decline by net selling 44.8 billion KRW and 2.0353 trillion KRW, respectively. Only institutions took a net buying position, purchasing 262.1 billion KRW.

By sector, most sectors closed lower, including machinery (-7.35%), electric and gas utilities (-2.56%), and medical precision (-1.92%). Only a few sectors showed strength, such as transportation and warehousing (+2.79%), telecommunications (+1.06%), and pharmaceuticals (+0.97%).

Among the top market capitalization stocks, mixed trends were observed. Samsung Electronics ended trading at 81,900 KRW, the same as the previous day, and Naver also closed unchanged at 362,500 KRW. Kakao closed up 1.98% at 128,500 KRW. On the other hand, SK Hynix (-0.78%), LG Chem (-0.74%), and Samsung SDI (-1.13%) closed lower.

The KOSDAQ closed higher at 986.12, up 0.26 points (+0.03%) from the previous trading day (985.86), supported by institutional buying. The index started at 986.43, up 0.57 points (0.06%).

Individuals and foreigners sold 11.5 billion KRW and 19.5 billion KRW, respectively. Only institutions bought about 55.1 billion KRW. By sector, other services (+1.76%), distribution (+0.94%), and pharmaceuticals (+0.87%) showed strength, while metals (-1.68%), other manufacturing (-1.36%), and entertainment and culture (-1.22%) closed lower.

Han Ji-young, a researcher at Kiwoom Securities, said, "The domestic stock market is under downward pressure due to uncertainty surrounding the U.S. consumer price index announcement and strong profit-taking desires caused by short-term level burdens. While the favorable export-import growth rate of China, Korea's main export country, in May and the fact that major large-cap stocks such as semiconductors and automobiles, which had been sluggish for some time, are bottoming out can be seen as positive factors for the overall Korean stock market, there is a burden to digest major macro events this week, so the index direction is expected to stagnate in the short term."

Park Seok-hyun, a researcher at KTB Investment & Securities, stated, "If the U.S. consumer price inflation rate exceeds 3.5% and significantly surpasses expectations, concerns about inflation and the Federal Reserve's response may resurface."

Shin Jung-ho, a researcher at eBest Investment & Securities, emphasized, "At this point, the applicable investment idea is to respond with a quality-focused approach without further expanding the proportion of leading stocks rather than spreading risk assets."

Meanwhile, on Wall Street, there is growing speculation that discussions on tapering (reducing bond purchases) will begin as early as this month's Federal Reserve Open Market Committee (FOMC) regular meeting. CNBC reported, "The Fed is in the early stages of preparing the financial markets for tapering," and "tapering is expected to be discussed at next week's FOMC regular meeting." Although some market participants speculated that tapering might be delayed due to May's new employment figures falling short of expectations, it is expected to commence as scheduled around summer.