[MarketING] Expanded Supply and Demand Volatility on 'Ne Manyeo-ui Nal'

KOSPI Closes Lower After 3 Days... Slight Decline
KOSDAQ Falls After 7 Days... Drops Below 880 Level

The KOSPI closed lower after four consecutive days of gains. Concerns over interest rates and volatility in supply and demand due to futures and options expiration influenced the market. While semiconductors have recently shown weakness amid profit-taking, institutions are stepping in to buy, drawing attention to whether this will bring a change in the stock price trend.

KOSPI Weakens After Four Days... KOSDAQ Drops Below 880

On the 8th, the KOSPI closed at 2,610.85, down 4.75 points (0.18%) from the previous day. The KOSDAQ ended the session at 876.13, up 4.59 points (0.52%). The KOSPI fell below the 2,600 mark during the session but narrowed its losses toward the close as foreign investors increased futures buying. The KOSDAQ showed weakness for the first time in seven days, falling below the 880 level after just one day.

[Image source=Yonhap News]

Foreign selling pressure dragged the index down. Foreign investors sold 392.4 billion KRW in the KOSPI market and 233.1 billion KRW in the KOSDAQ market but purchased 862.6 billion KRW in the futures market. Individual investors bought 66.9 billion KRW and 257 billion KRW in the two markets, respectively, but it was insufficient to defend against the index decline. Institutions net bought 317.1 billion KRW in the KOSPI market but net sold 20.3 billion KRW in the KOSDAQ market.

Seokhwan Kim, a researcher at Mirae Asset Securities, explained, "Concerns about the June U.S. Federal Open Market Committee (FOMC) meeting arose following Canada's interest rate hike, which weighed on the U.S. stock market and, in turn, burdened the domestic market. Additionally, volatility increased due to supply and demand fluctuations related to futures and options expiration." He added, "Foreign investors expanded futures buying toward the end of the session, which helped reduce some of the index's losses."

Despite the overall index weakness, the machinery sector showed notable strength. On the day, HD Hyundai Construction Equipment rose 6.73%, and HD Hyundai Infracore increased by 3.22%. HD Hyundai Infracore reached an intraday high of 11,690 KRW, setting a new 52-week high. Kim said, "The machinery sector rose due to expectations of improved operating profits in Q2, benefiting from China's sluggish construction equipment market and anticipated large-scale infrastructure investments in the U.S. The accelerated expansion of global market share by leading companies such as Doosan Bobcat and HD Hyundai also had a positive impact."

The semiconductor sector showed differentiated stock price movements. SK Hynix rebounded after three days of decline, rising 1.57% on the day, buoyed by news of the industry's first mass production of 238-layer 4D NAND. Samsung Electronics continued its decline for the third consecutive day. Although Samsung Electronics' stock price threatened the 70,000 KRW level during the session, it narrowed losses toward the close.

Semiconductors: Buying on Dips

While semiconductors have continued to weaken due to recent profit-taking, institutions' buying activity suggests a potential change in the stock price trend.

SK Hynix saw foreign investors net selling for two consecutive days, while institutions net bought for two consecutive days. Samsung Electronics experienced two days of foreign net selling until the previous day, while institutions net bought for three consecutive days. On this day, institutions were the largest buyers of SK Hynix, purchasing 99 billion KRW, followed by Samsung Electronics with 35.1 billion KRW. Foreign investors sold 73.1 billion KRW of SK Hynix, making it their largest sale, but bought 16 billion KRW of Samsung Electronics.

Despite recent profit-taking, opinions remain that IT sector weightings should still be increased. Daejun Kim, a researcher at Korea Investment & Securities, said, "The IT strength that began with semiconductors is expected to expand across the entire industry, including hardware and displays. Although stock prices rose on expectations of an industry rebound, earnings forecast recoveries will increasingly support stock prices over time." He added, "Even if temporary corrections occur, it is better to respond with bargain buying rather than selling, and maintaining IT as a core sector in portfolios will be a favorable choice."

Samsung Electronics is still considered an attractive investment. Dongwon Kim, a researcher at KB Securities, stated, "Samsung Electronics' stock price has risen less compared to memory semiconductor competitors this year, and considering the foundry business value and foreign exchange gains (won appreciation), it stands out as an attractive investment option."