[MarketING] KOSDAQ Recovers to 880 Level on Foreign Investors' Buying of Secondary Battery Stocks

KOSPI Rises for 3rd Day... Closes Slightly Higher
KOSDAQ Up 6 Consecutive Days on Strong Secondary Battery Stocks

The KOSDAQ index recovered to the 880 level for the first time in a month and a half, supported by foreign investors' buying spree in secondary battery stocks. The KOSPI closed slightly higher as the gains narrowed due to disappointing export news from China. Opinions suggest that the key to extending the stock market's bullish trend lies in the exchange rate and Chinese factors.

KOSDAQ Recovers to 880 Level on Strength in Secondary Battery Stocks

On the 7th, the KOSPI closed at 2,615.60, up 0.19 points (0.01%) from the previous day. The KOSDAQ ended the session at 880.72, rising 10.44 points (1.20%). The KOSDAQ continued its six-day winning streak, recovering to the 880 level for the first time since April 20, about a month and a half ago. The KOSPI, which had risen to 2,629.92 during the session, saw its gains narrow due to weak exports from China.

[Image source=Yonhap News]

The temperature difference between the KOSPI and KOSDAQ was due to foreign investors. Foreigners sold a net 40 billion KRW in the KOSPI market but bought a net 205.7 billion KRW in the KOSDAQ market. Individuals sold 294.5 billion KRW and 223.2 billion KRW in the two markets respectively, while institutions bought 347.9 billion KRW and 58.6 billion KRW net.

The recovery of the KOSDAQ to the 880 level was driven by the strong performance of secondary battery stocks, which attracted concentrated buying from foreign investors. EcoPro surged 16.96%, EcoPro BM rose 4.85%, and L&F increased 5.08%. Secondary battery stocks also showed strength in the KOSPI market. LG Energy Solution rose 1.68%, LG Chem 3.18%, Samsung SDI 2.51%, and POSCO Future M 1.32%. Foreign investors focused heavily on secondary battery stocks. The top foreign net buyer was LG Energy Solution with 130.4 billion KRW, followed by POSCO Future M (53.1 billion KRW), Samsung SDI (52.9 billion KRW), EcoPro (51.9 billion KRW), EcoPro BM (38.0 billion KRW), SK Innovation (35.2 billion KRW), LG Chem (32.5 billion KRW), Cosmo Advanced Materials (26.9 billion KRW), and L&F (25.2 billion KRW), with most of the top foreign net purchases being secondary battery stocks.

Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "The KOSDAQ rose by over 1% due to foreign buying and strength in secondary battery stocks," adding, "Secondary battery stocks showed strength in line with Tesla's sales increase and the full subsidy benefit for the 'Model 3' in the U.S., which boosted stock prices."

The KOSPI's gains narrowed due to foreign investors' semiconductor profit-taking and weak exports from China.

China's May exports fell short of market expectations, turning negative for the first time in three months. On the day, China's General Administration of Customs announced that last month's export value was $283.5 billion (approximately 368.6634 trillion KRW), down 7.5% year-on-year. This figure significantly undershot the previous month's 8.5% and the forecasted -0.4%.

Due to the weak Chinese export data, the won-dollar exchange rate, which had fallen below 1,300 KRW during the session, narrowed its decline and closed at 1,303.8 KRW, down 4.3 KRW from the previous day's closing price.

Exchange Rate and Chinese Factors Key to Extending Stock Price Gains

Analysis suggests that the exchange rate and Chinese factors hold the key to extending the stock price rally.

Choi Yoo-jun, a researcher at Shinhan Investment Corp., said, "Positive outcomes from external variables that had caused some hesitation improved risk appetite in the stock market, and expectations for Chinese stimulus measures have also emerged, raising hopes for the KOSPI's continued rise," adding, "The key to extension lies in the exchange rate and Chinese factors." He continued, "The won-dollar exchange rate faces resistance around 1,300 KRW, stemming from Korea's export and international balance of payments weakness. Since export sluggishness may continue for some time, momentum to offset this is needed, so interest in the presence and strength of Chinese stimulus measures will increase."

However, even if stimulus measures are introduced, it is expected to take time for their effects to materialize. Park Soo-hyun, a researcher at KB Securities, said, "China's second-quarter GDP is expected to show favorable figures due to the base effect, but the key is the second half of the year," adding, "If the Chinese government continues to see sluggish trends in employment and the real estate market, it is expected to boost domestic demand through monetary and real estate support policies. However, if the recovery speed varies among companies, even if the Chinese government announces stimulus measures, it may take time for their effects to appear."