KOSPI Closes Higher... Exchange Rate Stability, Foreign Inflows, Reopening Impact

KOSPI and KOSDAQ Close Higher Together
Impact of Exchange Rate Stability, Foreign Inflows, and Reopening

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[Asia Economy Reporter Junho Hwang] On the 4th, the KOSPI closed higher for the third consecutive trading day due to foreign inflows following exchange rate stabilization.

On that day, the KOSPI closed at 2,750.26, up 1.57% (42.44 points) from the previous session. Net purchases by foreigners and institutions lifted the index. Foreigners and institutions bought 194.3 billion KRW and 214.4 billion KRW, respectively. Meanwhile, individuals took the opportunity for profit-taking after a long time and sold a net 414.6 billion KRW.

LG Energy Solution Surpasses 500,000 KRW per Share

By stock, 767 stocks rose. Among the top market capitalization stocks, Samsung Electronics, the unchanging leader, recorded a 0.95% increase to 74,000 KRW. SK Hynix, which belongs to the same semiconductor sector, also closed up 0.40% at 124,500 KRW.

SK Hynix was pushed down but still holds the second place in market capitalization, LG Energy Solution rose 5.66% that day. This stock showed weakness for two days after listing but successfully rebounded the day before. On this day, it surpassed 500,000 KRW per share (closing price 504,000 KRW).

Dongjin Kang, a researcher at Hyundai Motor Securities, said, "Although vehicle semiconductor supply issues will cause somewhat sluggish performance in Q1, it will gradually recover in the second half of the year," adding, "Next year, with the full operation of the U.S. plant and mass production of 4680 batteries, long-term economies of scale will be realized." Hyundai Motor Securities set the target price for LG Energy Solution at 640,000 KRW.

Despite the sharp decline in tech stocks, which were the main cause of the U.S. stock market crash the day before, domestic internet sector leaders NAVER (2.18%) and Kakao (2.35%) maintained their upward momentum. This is analyzed as a result of tech stocks rising in after-hours trading, unlike the Nasdaq's decline the previous day.

Kyungmin Lee, a researcher at Daishin Securities, analyzed, "Despite the Nasdaq's sharp drop (-3.74%) the previous day, the current U.S. futures have sharply rebounded (Nasdaq 100, 1.84%) due to the surge in Amazon (14.26%) and Snap (59.18%) in after-hours trading, which positively affected investor sentiment."

Food and Beverage Sector Rebounds in Late Trading

By sector, the retreat of the paper and wood industry, which showed a strong rise throughout the morning session, stands out. The paper and wood industry rose 2.18%, yielding the top sector gain spot to the food and beverage sector (3.75%). Among food and beverage companies, Daehan Flour Milling, known for its 'Gompyo' flour, rose 10.63%, showing the largest gain within the sector. On this day, Daehan Flour Milling announced that Honorary Chairman Jonggak Lee passed away at the age of 90. Other food and beverage companies such as Sajo Dong-A One (9.17%), Hite Jinro (9.03%), and Lotte Chilsung (7.64%) also showed rising stock prices.

Seokhwan Kim, a researcher at Mirae Asset Securities, analyzed, "Stocks related to reopening showed an upward trend due to the government's possibility of transitioning the quarantine system."

Within the paper and wood industry, stocks increased their gains due to expanded demand for delivery paper amid the government's extension of social distancing, but showed signs of weakening in the afternoon. Stocks such as Moorim Paper, Asia Paper, and Taelim Packaging showed gains in the 3-5% range.

Revival of Gaming Stocks

The KOSDAQ, which started the day in a downward trend, reversed to close higher. The KOSDAQ closed at 902.87, up 1.26% from the previous session. While foreigners and institutions sold net amounts of 41.8 billion KRW and 1.3 billion KRW respectively, individuals bought a net 59.1 billion KRW, defending the index from falling.

Among all stocks, 1,088 showed gains. Among the top market cap stocks, the rise in gaming stocks stands out. Wemade rose 15.49%, Kakao Games rose 11.16%. Pearl Abyss closed up 5.73%.

Kakao Games had previously lost the top spot for highest revenue on Google Play to NCSoft's 'Lineage W' but reclaimed it the day before. Jieun Lee, a researcher at Daishin Securities, stated in an analysis report that day, "By merging with its subsidiary Friends Games and blockchain specialist WayToBit, it has started developing P2E (Play to Earn) and NFT (Non-Fungible Token) game businesses based on the Bora coin," adding, "Since it already has listed coins, it will quickly establish a blockchain game ecosystem upon releasing P2E and NFT games." Daishin Securities set the target price at 100,000 KRW.

The researcher added, "The European Central Bank (ECB) signaling a hawkish shift in monetary policy led to a sharp rise in the euro, weakening the dollar and stabilizing the won/dollar exchange rate downward, creating a favorable environment for foreign demand." On this day, the won-dollar exchange rate closed down 0.78% at 1,197.00 KRW.