"Thank You Amazon" ... Foreign and Institutional Investors Drive Continued Rise in Domestic Stock Market

On the 28th, the KOSPI index opened at 2437.57, up 0.91% (22.04 points) from the previous trading day, as dealers were working in the Hana Bank dealing room in Euljiro, Seoul. The won-dollar exchange rate started at 1306 won, down 7.3 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Ji Yeon-jin] The domestic stock market continued its upward trend on the 29th. Although the U.S. recorded a negative GDP growth rate for the second quarter, entering a technical recession, this has instead fueled expectations that the September interest rate hike will be scaled back, leading to simultaneous buying by foreign and institutional investors.

As of 11 a.m. on the day, the KOSPI index rose 22.49 points (0.92%) from the previous day to 2457.76. At this time, foreigners and institutions were net buyers of 156.3 billion KRW and 187.5 billion KRW respectively, driving the index. Individual investors were net sellers of 341.1 billion KRW.

Following the sharp rise of Amazon and Apple after their earnings announcements in the U.S. stock market the previous day, technology growth stocks such as NAVER (5.87%) and Kakao (3.18%) showed strength. Only SK Hynix fell by 1.3%, while most of the top market cap stocks including Samsung Electronics, LG Energy Solution, Samsung Biologics, Hyundai Motor, and LG Chem showed slight gains.

The U.S. stock market rose as the disappointing GDP results highlighted the likelihood of a reduced interest rate hike in September, and expectations for the passage of Biden’s climate bill spread. Additionally, Treasury Secretary Yellen expressed confidence in the economy, and the passage of a semiconductor industry support bill in Congress positively influenced investment sentiment. Ji-young Han, a researcher at Kiwoom Securities, said, "The domestic stock market is also showing strength, supported by relief from the FOMC, a rebound in the U.S. stock market amid the acceptance of recession as a given, and a solid second-quarter earnings season. The earnings surprises from Apple and Amazon have improved investment sentiment for domestic semiconductor, IT hardware, and growth stocks."

In the KOSPI market, the service sector is recording gains in the 2% range, while sectors such as chemicals, construction, transportation and warehousing, steel, machinery, and securities are also rising over 1%. Conversely, food and beverage, textiles and apparel, non-metallic minerals, and medical precision sectors are showing weakness.

The KOSDAQ index rose 6.98 points (0.87%) to 805.30. Foreigners and institutions were net buyers of approximately 38.4 billion KRW and 29.3 billion KRW respectively, but individual investors’ net selling of about 64.4 billion KRW limited the gains.

Except for pharmaceuticals and computer services, all sectors are on the rise, with Infovine surging 18% due to foreign buying, pushing the telecommunications services sector to gains exceeding 3%. Daemyung Energy hit the daily upper limit as expectations grew for the passage of Biden’s climate bill.

Daemyung Energy, established in 2014, is the leading renewable energy company in Korea. It is expected to benefit from Biden’s climate change bill, which includes a budget of about 2 trillion USD (approximately 2620 trillion KRW) for tax support for eco-friendly energy such as solar and wind power and subsidies for electric vehicle purchases, attracting buying interest.

Among other top market cap stocks on KOSDAQ, HLB is up 4%, and Pearl Abyss rose 3.48%. Celltrion Healthcare, L&F, and Celltrion Pharm are showing slight gains, EcoPro BM is flat, while Alteogen and Chunbo are down 1.35% and 0.46% respectively.