[Asia Economy Reporter Lee Seon-ae] On the 22nd, as the KOSPI broke below the 2700 level during the session and fell back to the 2690 level, individual investors have been making relentless net purchases.
On that day, the KOSPI opened down 23.49 points at 2704.72 (0.86%↓), and the KOSDAQ opened down 6.91 points at 922.77 (0.74%↓). Immediately after the opening, the KOSPI surrendered the 2700 level again and dropped to the 2690 level. The KOSDAQ also fell below the 920 level, showing a weak trend.
As of 11 a.m., the KOSPI was at 2699.62, and the KOSDAQ was at 917.18. Seo Sang-young, a researcher at Mirae Asset Securities, said, "Although the U.S. stock market started strongly due to the Tesla effect early in the session, the widening decline caused by the selling of tech stocks due to the sharp rise in Treasury yields is a burden on the Korean stock market." He added, "Especially, Federal Reserve Chairman Jerome Powell’s assertion that globalization has clearly slowed could dampen investment sentiment toward Korea, which is highly dependent on exports, which is also a burden." He continued, "Furthermore, considering ECB President Lagarde’s expression of concerns about the economy and the weakness of the Korean won, foreign demand is also negative, which will add to the burden on the Korean stock market."
Chairman Powell attended a discussion on the international economy at the International Monetary Fund (IMF) meeting on the 21st (local time) and said regarding interest rate hikes, "In my view, it would be appropriate to move more quickly," and "A 50bp increase will be considered at the May meeting." This statement suggests the possibility of a 50bp rate hike at the Federal Open Market Committee (FOMC) regular meeting scheduled for May 3-4.
The market is increasingly expecting that the Fed will take at least three 'big steps' of 0.5 percentage point rate hikes in the remaining six FOMC meetings this year. Chairman Powell also hinted at the possibility of multiple 50bp rate hikes, not just one in May, saying in the discussion, "The market is generally responding appropriately."
Seo Jeong-hoon, a researcher at Samsung Securities, explained, "The rising trend in market interest rates could stimulate debates on stock market valuations," and added, "Since high interest rates are expected for the time being, caution should be exercised when investing in small- and mid-cap growth stocks."
Institutions, which showed net buying the previous day, have turned to net selling again today, along with foreigners, resulting in a selling bias. As the KOSPI broke below the 2700 level, only individuals are showing a buying bias alone. At this time, institutions are selling about 520.8 billion KRW and 120.7 billion KRW in the KOSPI and KOSDAQ markets, respectively. Foreigners are also recording net sales of about 68.6 billion KRW and 110.8 billion KRW in the two markets, respectively. On the other hand, individual net buying is eye-catching. In the KOSPI market alone, individuals have a buying advantage of 590.3 billion KRW. They are buying 245.6 billion KRW in the KOSDAQ market, with total net purchases exceeding 800 billion KRW. The securities industry has also recommended a split buying response around the 2600 level.
Lee Kyung-min, a researcher at Daishin Securities, emphasized, "It is best to refrain from increasing exposure above the 2700 level and maintain a split buying strategy using volatility around the 2600 level."
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