Institutions Engaging in 'Profit-Taking' Lead KOSPI to Close Lower on First Trading Day of New Year

KOSPI Closes Down 0.5% and KOSDAQ Down Around 1%
Expecting Benefits from Additional IRA Guidelines... 2nd Battery and Automobile Stocks Show Strength

[Asia Economy Reporter Minji Lee] On the first trading day of the new year, the KOSPI and KOSDAQ indices closed lower due to net selling by institutional investors.

On the morning of the 2nd, the KOSPI closed at 225.67, down 0.48% (10.73 points) from the previous trading day. The KOSPI started the day with a rise of over 0.6% and seemed to climb nearly 1% during the session, but it ended the day in a decline as institutions sold off their holdings.

Looking at investor trends, institutions alone sold stocks worth 264.4 billion KRW, while institutions bought stocks worth 219.3 billion KRW. Foreigners were net buyers with purchases worth 8.5 billion KRW. Lee Kyung-min, a researcher at Daishin Securities, analyzed, “With limited inflow of foreign funds, financial investment firms began selling spot stocks after the ex-dividend date, so there were no factors in supply and demand to push the index higher.”

On this day’s stock market, secondary battery and automobile-related stocks showed strength. Although there was some hesitation during the session due to profit-taking by institutions, LG Energy Solution (2.41%), Samsung SDI (1.86%), POSCO Chemical (6.39%), Hyundai Motor (3.97%), and Kia (3.71%) all closed higher.

Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, “The additional guidelines of the US IRA (Inflation Reduction Act) mentioned the possibility of subsidies for commercial electric vehicles, which positively reflected the expectation that Korean-made electric vehicles could receive subsidies if sold commercially, such as through leasing. For Hyundai Motor, expectations for strong Q4 earnings were also reflected due to easing raw material cost pressures and the strong dollar effect.”

Among other large-cap stocks, Samsung Electronics (0.36%) and SK Hynix (0.93%) rose, as did Samsung Biologics (0.73%) and NAVER (1.13%), while POSCO Holdings (-1.63%), Celltrion (-0.31%), Samsung C&T (-1.76%), and KB Financial Group (-1.86%) declined.

Among stocks with large price swings, Korea Electric Power Corporation (KEPCO) (-11%) was notable, as the government’s electricity rate hike proposal fell short of market expectations, leading to criticism from the securities industry and prompting investors to sell shares. Additionally, game stocks such as NCSoft (-3.68%), Netmarble (-7.45%), and Krafton (-2.38%), which had been rising on expectations of expanded issuance of foreign game licenses in China, also closed lower.

The KOSDAQ index also closed lower at 671.51, down 1.15% (7.78 points) from the previous trading day. Although it showed a rise of over 1% during the session, it turned downward due to simultaneous net selling by foreigners and institutions. In the market, foreigners and institutions sold stocks worth 55.8 billion KRW and 29 billion KRW respectively, while individuals alone bought stocks worth 72.5 billion KRW.

Among the large-cap stocks, the rise in secondary battery-related stocks was prominent. Ecopro BM (1.41%), L&F (6.85%), and Ecopro (6.80%) rose, while Celltrion Healthcare (-1.03%), Kakao Games (-1.01%), Pearl Abyss (-3.58%), Studio Dragon (-2.56%), and Celltrion Pharm (-1.79%) declined.