KOSPI Closes Higher, KOSDAQ Ends Mixed
Foreign Net Buying Continues but Trading Volume Decreases
[Asia Economy Reporter Junho Hwang] On the 9th, the KOSPI closed higher amid net buying by foreign investors. This is analyzed as a result of growing expectations for a slowdown in the pace of monetary tightening ahead of the U.S. midterm election results and the release of the U.S. October Consumer Price Index (CPI).
Waiting for U.S. CPI and Midterm Election Results... Closing Higher
On that day, the KOSPI closed at 2,424.41, up 1.06% (25.37 points) from the previous session. Following net buying by institutions (348.1 billion KRW) from the early session, foreign investors (415.6 billion KRW) also turned to net buying, leading the index higher. Individual investors took advantage of a rare profit-taking buying opportunity and conducted net selling worth 776.6 billion KRW. As foreign investors concentrated their purchases on large-cap stocks, the KOSPI 200 also closed at 315.23, up 1.03% from the previous session.
The day's upward trend is analyzed to be influenced by the previous day's weakening of the U.S. dollar and a decline in government bond yields. The won-dollar exchange rate closed at 1,364.80 won, down 20.10 won. The final bid yield on the 3-year government bond in the morning rose by 0.0064 percentage points to 4.092%.
Seokhwan Kim, a researcher at Mirae Asset Securities, said, "The market rose as expectations for a slowdown in the pace of tightening increased ahead of the U.S. midterm election results and the U.S. CPI announcement," adding, "Foreign and institutional investors focused their purchases on the electric and electronics and chemical sectors."
Foreign Investors Focus on Large-Cap Stocks
Among all stocks, 573 stocks closed higher. Many of the top market capitalization stocks showed slight gains. Among them, LG Chem closed at 715,000 KRW, up 3.47% from the previous session. It had the largest gain among the top 10 market cap stocks. LG Chem announced that it would halt participation in the multinational Phase 3 clinical trial of the gout drug 'Tigulixostat' under development in China. Although this was news of giving up clinical trials in China, where there are many gout patients, the stock price rose as expectations for new drug development increased.
Samsung Electronics, the perennial market leader, maintained a slight upward trend during the session and closed at 62,000 KRW, up 0.32%. NAVER showed an upward trend from the early session and closed at 180,000 KRW, up 3.47%.
By sector, the electric and gas sector showed the highest rise of 5.52% that day. Korea Electric Power Corporation (KEPCO) led the sector's rise with an 8.77% increase. This reflects expectations following news that the banking sector has stepped in as a savior for KEPCO, which is expected to post a deficit of 30 trillion KRW this year.
Besides the electric and gas sector, sectors such as steel and metals (3.64%), securities (2.16%), and machinery (1.82%) also showed notable gains.
Kyungmin Lee, a researcher at Daishin Securities, analyzed, "The net buying by foreign investors supported the stock price rise," adding, "In the futures market, foreigners net bought more than 500 billion KRW, which expanded the basis and stimulated net buying in the financial investment spot market."
KOSDAQ Mixed
The KOSDAQ, where foreign investors' net buying appeared late, showed mixed trends throughout the day. Foreign investors, who repeatedly net sold during the session, reversed direction to net buying (13.2 billion KRW) just before the close, leading the index to close higher. The KOSDAQ closed at 714.60, up 0.18% (1.27 points) from the previous session. Individual investors net bought 79.8 billion KRW, while institutions net sold 86.1 billion KRW.
More than half of the stocks closed down or flat. The KOSDAQ 150 also recorded 1,029.36, down 0.20% from the previous session.
Among the top market cap stocks, L&F turned to gains in the late session, closing at 225,100 KRW, up 3.02%. Cheonbo also traded up 3.02% at 238,700 KRW. By sector, the broadcasting services sector, boosted by gains in YTN (20.96%) and Korea Economic TV (4.76%), showed a relatively higher rise of 3.30% compared to other sectors.
Meanwhile, although the market closed higher that day, the securities industry analyzed that it was not very satisfactory as the net buying amount by foreign investors continued to decrease. On the 10th, the Korean market will face options expiration. In the U.S., the October CPI and weekly initial jobless claims will be announced. In Europe, the European Central Bank (ECB) economic report will be released.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
