The Four Witching Days... KOSPI 2600 on the Edge of a Cliff

Mixed Stock Market Closes
KOSPI Sees Institutional Net Buying
KOSDAQ Ends Higher

On the 8th, the KOSPI index opened at 2,633.53, up 7.19 points (0.27%), as dealers were busy working in the Hana Bank dealing room in Euljiro, Seoul. The won-dollar exchange rate started at 1,255.0 won, down 2.7 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] On the 9th, the stock market closed lower as it was the day of the four witches, with foreign investors showing a strong intention to net sell.

On that day, the KOSPI closed at 2625.44, down 0.71 points (0.03%) from the previous session. While individuals engaged in net buying worth 378.4 billion KRW, institutions, which had shown a net selling intention in the morning, joined the net buying with 525.8 billion KRW.

Since it was the simultaneous expiration day for futures and options, it appears that institutions switched to net buying. Jeong In-ji, a researcher at Yuanta Securities, said, "Overall domestic institutions may release about -46 billion KRW in stock futures sales, but there could be an inflow of buying worth about 250 billion KRW related to mini futures," adding, "We expect an inflow of financial investment buying related to KOSPI200 futures and anticipate buying pressure centered on financial investment during the simultaneous expiration call auction."

However, with foreigners net selling about 949.5 billion KRW, the index closed lower. Foreigners continued their net selling intention as they built short positions in futures.

Among all stocks, 270 stocks recorded declines. Most of the top market capitalization stocks also fell. The perennial leaders Samsung Electronics -0.15%, LG Energy Solution -0.71%, Samsung Biologics -2.05%, and other major stocks saw their prices decline. On the other hand, LG Chem closed higher for the second consecutive day, rising 1.38%.

In the morning, the banking sector rose due to the increase in U.S. Treasury yields. Subsequently, as investor sentiment improved, sectors such as transportation equipment, non-metallic minerals, machinery, chemicals, and insurance closed slightly higher.

Lee Kyung-min, a researcher at Daishin Securities, analyzed, "On the day of simultaneous futures and options expiration, the market declined amid net selling by both foreigners and institutions," adding, "Ahead of the U.S. May CPI announcement on the 10th, inflationary pressure due to the recent rise in oil prices and the burden of Federal Reserve interest rate hikes have resurfaced, and U.S. Treasury yields continue to rise again, shaking investor sentiment." However, he added, "During the day, the calming of U.S. Treasury yield increases, reversal of dollar weakness, and China's May exports (up 16.9% year-on-year) significantly exceeding expectations (8.0%) partially improved investor sentiment." The won-dollar exchange rate closed at 1256.90 KRW, up 0.25% from the previous session.

On the 8th, the KOSPI index opened at 2633.53, up 7.19 points (0.27%), as dealers were busy working in the Hana Bank dealing room in Euljiro, Seoul. The won-dollar exchange rate started at 1255.0 won, down 2.7 won. Photo by Moon Honam munonam@

In the afternoon, news came that a re-lockdown due to COVID-19 would be implemented in Shanghai, China. Regarding this, Jeon Jong-gyu, a researcher at Samsung Securities, explained, "There is a big difference between a lockdown and a re-lockdown," adding, "Unlike a lockdown, it refers to a small lockdown policy that blocks the blocks around the COVID-19 outbreak area." However, the Shanghai Composite Index recorded 3246.14, down 0.54% from the previous session, and the Shenzhen Composite Index also fell 31.31 points to 2052.11.

The KOSDAQ fluctuated but succeeded in a late-session rebound, closing at 877.18, up 0.25% from the previous session. Following individuals who net bought 98.1 billion KRW throughout the day, institutions also engaged in net buying worth 21.4 billion KRW, leading the index to close higher. Foreigners conducted net selling worth 120.3 billion KRW on the day.

However, net buying funds seemed to be concentrated in a few stocks. Among all stocks, 985 stocks declined while 391 stocks rose. Most of the top market capitalization stocks closed higher. Notable gains included EcoPro BM 3.56%, Celltrion Healthcare 2.93%, L&F 1.51%, and HLB 3.81%.