KOSPI Recovers to 2670 Early on Back of Institutional Buying
But Gains Slow as Foreign Selling Increases During Session
[Asia Economy Reporter Ji Yeon-jin] The domestic stock market, which started higher, is giving back some of its gains as foreign investors slightly increase their buying. The early strength was driven by the previous day's rebound in the U.S. stock market on expectations of monetary policy easing, but the domestic consumer price index exceeding 5% appears to have dampened investor sentiment due to tightening concerns.
As of 10:22 a.m., the KOSPI index stood at 2,665.42, up 6.43 points (0.24%) from the previous day. The index opened 20.58 points (0.77%) higher but the gains have significantly slowed. Institutions are leading the bullish market with net purchases worth approximately 94.3 billion KRW, but foreign investors and individuals are net sellers with 66 billion KRW and 24.8 billion KRW respectively, limiting the index's upside. Individuals switched from active buying right after the market opened to net selling in the early session.
The selling pressure intensified following the government announcement that South Korea's consumer price inflation rate last month hit the highest level in 13 years and 9 months. According to Statistics Korea, the consumer price index for May was 107.56 (2020=100), up 5.4% compared to the same month last year. This inflation rate is the highest since August 2008 (5.6%).
On the other hand, the U.S. stock market rebounded the previous day as private sector employment data came in weaker than expected, fueling expectations that the Federal Reserve (Fed) would slow the pace of interest rate hikes. However, mixed comments from Fed officials regarding tightening and the upcoming release of the U.S. May nonfarm payroll data tonight could change the outlook on Fed monetary policy, leading domestic investors to adopt a wait-and-see approach.
Lee Kyung-min, a researcher at Daishin Securities, explained, "Looking at Korea's inflation indicators, the burden of tightening remains, so the domestic stock market is not gaining upward momentum. There is a cautious sentiment ahead of tonight's U.S. employment data release, and compared to the U.S., which saw a sharp decline earlier this year, Korea has performed relatively well, so the market is rising less than the U.S."
Among the top market cap stocks, Kakao saw the largest gain, rising over 3% as bargain hunting emerged. Samsung Electronics, SK Hynix, Samsung Biologics, and NAVER are showing slight gains. LG Energy Solution, Samsung SDI, and Hyundai Motor, which were flat during the session, turned slightly lower.
By sector, banks and chemicals are up more than 1%, while food and beverages, transportation equipment, and non-metallic minerals are showing weakness.
The KOSDAQ index is trading at 893.73, up 2.59 points (0.29%) from the previous day. Individuals and institutions bought shares worth approximately 99.8 billion KRW and 11.7 billion KRW respectively, while foreign investors sold about 100.8 billion KRW.
Since the 'Cheonsdak (1000 points)' level was breached earlier this year, the KOSDAQ has been in a bearish trend, trading below 900 for the past month after closing at 900.06 on May 4. The opening price today was 898.43, up 0.82% (7.29 points) from the previous day, raising hopes of recovering the 900 mark, but the index is giving back gains during the session.
Secondary battery material companies such as EcoPro BM (-0.12%) and L&F (-1.54%) showed weakness, while Celltrion announced it submitted a clinical phase 3 trial plan for its rheumatoid arthritis biosimilar ‘CT-P47’ to the U.S. Food and Drug Administration (FDA), boosting Celltrion Healthcare and Celltrion Pharm. Kakao Games, Pearl Abyss, and Wemade are showing slight gains.
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