[MarketING] 'Institutions Buying After a Long Time' VS 'Individuals Watching Inflation'

KOSPI Ends Higher After Four Days, Recovers 2460 Level
Institutional Buying Drives Index Up
Individuals Hold Back Ahead of CPI Announcement

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] The KOSPI rebounded after four days, recovering the 2460 level thanks to institutional investors who bought stocks for the first time in a while. On the other hand, individual investors, who had been continuously buying to defend against the index decline, showed a cautious sentiment as they awaited the U.S. inflation data scheduled for release that day, leading to a contraction in investment sentiment.

KOSPI Recaptures 2460 Level on Institutional Buying

On the 14th, the KOSPI closed at 2465.64, up 12.94 points (0.53%) from the previous day. The KOSDAQ ended the session at 779.58, rising 7.03 points (0.91%).

Institutional investors led the KOSPI rebound by buying stocks for the first time in a while. On that day, institutions purchased 301.7 billion KRW in the KOSPI market and 4.8 billion KRW in the KOSDAQ market. Institutions had shown a selling bias until now. This month, including that day, there were only two days of net buying. Institutions sold a total of 2.5712 trillion KRW in the KOSPI market this month alone. The buying on this day is interpreted as bargain hunting following the recent decline in the KOSPI.

Stocks targeted by institutional buying showed strength. Institutions bought Samsung Electronics the most with net purchases of 86.5 billion KRW, followed by SK Hynix (38.6 billion KRW), LG Electronics (31 billion KRW), Hyundai Mobis (20.8 billion KRW), and LG Chem (13.8 billion KRW). Samsung Electronics rose 0.48%, and SK Hynix closed up 3.09%. LG Electronics, Hyundai Mobis, and LG Chem increased by 5.69%, 2.65%, and 0.9%, respectively. Notably, institutions have net bought LG Electronics for nine consecutive trading days.

Kim Seokhwan, a researcher at Mirae Asset Securities, explained, "Ahead of the U.S. CPI announcement scheduled for today, cautious sentiment prevailed, but bargain hunting following the previous day's decline expanded, leading to gains in both KOSPI and KOSDAQ. While foreign net buying was limited, the inflow of institutional buying led the index higher."

In particular, semiconductor stocks showed strength amid the ChatGPT craze. Researcher Kim said, "Due to the ChatGPT craze, expectations for increased demand for artificial intelligence (AI) semiconductors boosted semiconductor stocks. Leading domestic semiconductor companies such as Samsung Electronics and SK Hynix are spearheading the production of high-performance DRAM, so semiconductor design and equipment sectors are expected to benefit together in the future." He added, "Expectations for discussions on the 'K-Chips Act,' which provides tax benefits to semiconductor companies, were also reflected."

Individuals Sell Ahead of Inflation Data

Individual investors, who had been buying to defend the index decline, showed selling pressure on that day. Individuals sold 385.2 billion KRW in the KOSPI market and 104.5 billion KRW in the KOSDAQ market.

The fact that individuals, who had actively bought to defend the index during the recent KOSPI weakness, sold on that day appears to be due to cautious sentiment as they awaited confirmation of the U.S. CPI announcement.

Last week, the University of Michigan's report on one-year-ahead inflation expectations was revised upward compared to the previous month, highlighting renewed inflation uncertainty. The one-year-ahead inflation expectation released by the New York Federal Reserve the previous day remained at 0.5%, the same as the previous month, indicating that high levels persist. Researcher Kim explained, "The CPI seasonal adjustment factors and item weight changes updated on the 10th mostly revised previous figures upward, raising caution about the January CPI. The month-over-month inflation rate was revised from -0.1% in December last year to +0.1%, significantly weakening expectations for disinflation mentioned by Jerome Powell, Chair of the U.S. Federal Reserve."

Individual investment sentiment has recently shown some improvement. Choi Yujun, a researcher at Shinhan Investment Corp., said, "Recently, customer deposits and credit balances have increased simultaneously, indicating an inflow of individual funds. With market interest rates lower than at the end of last year and perceptions that the tightening cycle is in its later stages, there is a possibility of increased individual buying during price declines. However, the January CPI to be announced today and the Producer Price Index (PPI) to be released on the 16th will be key factors."

This content was produced with the assistance of AI translation services.