[MarketING] KOSPI Recovers to 2560 Level Amid Revived Risk Appetite Sentiment

KOSPI Rises Over 1% on Foreign Buying
KOSDAQ Gains Over 2%

The KOSPI closed higher for the first time in six days, reclaiming the 2560 level. The KOSDAQ also rebounded after four days, regaining the 870 level. This is attributed to a recovery in risk appetite amid expectations that inflationary pressures will ease ahead of the U.S. Consumer Price Index (CPI) announcement.

KOSPI Recovers to 2560 Level... KOSDAQ Approaches 880

On the 11th, the KOSPI closed at 2562.49, up 41.79 points (1.66%) from the previous day. The KOSDAQ ended the session at 878.73, rising 18.38 points (2.14%).

[Image source=Yonhap News]

Foreign investors led the index gains. On that day, foreigners net purchased 129.9 billion KRW in the KOSPI market and 221.3 billion KRW in the KOSDAQ market. They also bought over 1.2 trillion KRW in the futures market. Conversely, institutions net sold 25.9 billion KRW and 67.6 billion KRW respectively, while individuals sold 134.8 billion KRW and 173.4 billion KRW respectively.

Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "Ahead of the U.S. June CPI announcement, risk appetite recovered due to expectations of easing inflation, leading the KOSPI to gain over 1% and the KOSDAQ to rise over 2%. The won-dollar exchange rate also fell below 1300 won, expanding the won's strength." On that day, the won-dollar exchange rate in the Seoul foreign exchange market closed at 1293.7 won, down 12.8 won from the previous day.

Choi Yoo-jun, a researcher at Shinhan Investment Corp., explained, "The decline in U.S. expected inflation and the sharp drop in the won-dollar exchange rate due to yuan appreciation acted as drivers for the stock price rise. The yuan was positively influenced by expectations of additional stimulus measures, such as the extension of China's real estate market support policies."

Samsung Electronics, which had been weak due to profit-taking around the Q2 earnings announcement last week, rebounded after five days. It rose nearly 3%, reclaiming the 71,000 won level. On that day, Samsung Electronics closed at 71,500 won, up 2.88% from the previous day. Semiconductor stocks performed strongly in the U.S. market the previous day, and foreign investors who had been selling stocks turned to net buying for the first time in a while. Foreigners were the third-largest net buyers of Samsung Electronics, purchasing 63.1 billion KRW. Institutions, who had been selling, also became net buyers of Samsung Electronics, buying 54.1 billion KRW, the largest net purchase. SK Hynix also rose 2.81%.

In the KOSDAQ, POSCO DX surged, supporting the index rise. POSCO DX closed at 20,250 won, soaring 27.36% from the previous day. The stock price rose sharply following media reports that POSCO DX plans to transfer its listing to the KOSPI market. POSCO DX stated, "It is true that the transfer listing is being reviewed at the working level, but it is not yet finalized."

Nuclear Power Stocks Rally on Expectations for New Plant Construction

Nuclear power stocks showed notable strength as the government announced plans to consider new nuclear power plant construction.

On that day, Doosan Enerbility closed at 18,850 won, up 6.32% from the previous day. KEPCO KPS rose 6.02%, KEPCO Engineering & Construction 7.88%, Hanshin Machinery 14.48%, and KEPCO Industrial Development hit the daily upper limit.

Lee Chang-yang, Minister of Trade, Industry and Energy, stated at the 29th Energy Committee meeting held the previous day, "To ensure stable power supply capacity in preparation for increased demand, it is necessary to consider expanding new supply capacities such as nuclear power and hydrogen."

Accordingly, the Ministry of Trade, Industry and Energy plans to start establishing the 11th Basic Plan for Electricity Supply and Demand (Electricity Plan), applicable from 2024 to 2038, by the end of this month to review the necessity of expanding power supply capacity, including new nuclear power plants.

Overseas orders are also expected in the second half of the year. Lee Min-jae, a researcher at NH Investment & Securities, said about Doosan Enerbility, "The long-awaited large-scale nuclear power main contracts will begin in the second half of the year, and additional orders are expected to follow faster than anticipated. With the mid- to long-term direction leading to small modular reactors (SMRs), the corporate value of the nuclear power sector will trend upward."