KOSPI Falls About 0.7% in Morning Session... Foreigners and Institutions Net Sellers

Increased Volatility in US Stock Market
KOSPI Falls to 3240 Level
Brokerage Firms Say "Interest in Growth Stocks Will Rise"

[Asia Economy Reporter Minji Lee] The KOSPI continues its downward trend.

As of 10:18 a.m. on the 21st, the KOSPI stood at 3,245.55, down 0.68% (22.38 points) from the previous trading day. The KOSPI opened the session at 3,264.18, down 0.11% (3.75 points) from the previous day, and has been extending its losses. This reflects the impact of last week's U.S. stock market closing lower after belatedly factoring in the Federal Open Market Committee (FOMC) results. Looking at investor trends, individual investors bought stocks worth 792.6 billion KRW alone, while foreigners and institutions sold stocks worth 363.8 billion KRW and 432.6 billion KRW, respectively.

Sangyoung Seo, a researcher at Mirae Asset Securities, said, "The possibility of expanded economic lockdowns in various countries due to the Delta variant virus and concerns about second-quarter earnings have been reflected in the stock market," adding, "The domestic stock market is expected to show a downward trend influenced by the U.S. stock market, but the decline is not expected to be significant."

By sector, textiles and apparel (0.85%), services (0.30%), and pharmaceuticals (0.04%) showed the largest gains. Companies such as Iljinsilup (5.1%) and F&F (3.2%) were on the rise. Among the top market capitalization stocks, Kakao and NAVER rose by 1.94% and 0.38%, respectively. Samsung SDI (0.89%) and Celltrion (1.11%) also showed upward trends. On the other hand, Samsung Electronics and SK Hynix fell by 0.87% and 1.20%, respectively, amid concerns over a semiconductor industry peak out.

At the same time, the KOSDAQ index stood at 1,013.06, down 0.28% (2.82 points) from the previous trading day. The KOSDAQ started the session at 1,014.59, down 0.13% (1.29 points), and the downward trend continues. Looking at investor trends, individual investors continued net buying with purchases worth 80.8 billion KRW. In contrast, foreigners and institutions sold stocks worth 26.5 billion KRW and 41.7 billion KRW, respectively.

By sector, information devices (1.28%), computer services (0.89%), general electrical and electronics (0.76%), and pharmaceuticals (0.59%) showed gains. Among the top market capitalization stocks, Celltrion Healthcare (0.34%) and Celltrion Pharm (2.20%) rose. Meanwhile, Pearl Abyss (-1.50%), Kakao Games (-0.35%), CJ ENM (-1.35%), HL Biopharma (-0.41%), and SK Materials (-1.98%) declined.

Meanwhile, market experts suggested that continuing to invest in growth stocks is advisable amid the unsettled financial markets following the June FOMC. Considering that the indicators reflecting expectations for economic recovery due to vaccine distribution?which was the background for raising inflation and interest rates in the first quarter of this year?have risen to pre-COVID-19 levels, further gains are deemed unlikely.

Namjoong Moon, a researcher at Daishin Securities, explained, "The June FOMC clarified the previously vague path of the Fed's monetary policy normalization, so the impact is expected to be limited in the short term," adding, "If considering the second half of the year, growth stocks should be targeted at this point." Moon further analyzed, "In the second half, inflation may decrease due to last year's high base effect, and the investment environment may favor growth stocks due to cryptocurrency market regulations."

Among growth stocks, investment sentiment is expected to expand around internet and media, leisure, and secondary batteries, which have good cash flow. Since the preference for growth stocks has not fully recovered, earnings and cash flow are expected to drive investment trends. Euntaek Lee, a researcher at KB Securities, said, "There are concerns about how much further growth stocks can go, but the growth stock rally has lasted for over 10 years," adding, "In the long term, technological innovation is guaranteed, but attention will focus on growth stocks with poor short-term cash flow."