Buy or Sell Stocks... Confused Moves by Individuals and Foreigners

KOSPI Starts Lower, Turns Upward
Individuals Buy for First Time in 3 Trading Days
Uncertainty Remains Until the 14th

On the 11th, the KOSPI and KOSDAQ indices continued their upward trend for the second consecutive trading day. Individuals, who had been selling off in stop-loss trades for two consecutive days, started buying as soon as the market opened. Foreign investors, who had been selling aggressively after the lifting of martial law, appeared to calm down with net buying on the 9th, but resumed selling for two consecutive trading days. Both individuals and foreigners are showing indecisive behavior amid unresolved uncertainties. With the second impeachment motion against President Yoon Seok-yeol scheduled to be tabled on the 14th, it is expected that the supply and demand by investors will continue to fluctuate until the uncertainty is completely cleared.

On that day, the KOSPI index opened at 2412.15, down 5.69 points (0.24%) from the previous session, but soon turned upward, recording 2424.33, up 6.49 points (0.27%) as of 9:21 a.m. In the securities market, individuals who had sold more than 600 billion won for two consecutive trading days showed a buying advantage of 100 billion won in the early session. It was the first time in three trading days that individuals turned to a buying stance. The KOSDAQ market also stopped net selling for seven consecutive days and recorded net buying. Previously, individuals had sold 202.2 billion won and 421.9 billion won on the 9th and 10th, respectively. Individual investors had engaged in net buying even on August 5th’s ‘Black Monday,’ when the stock market crashed sharply, but started stop-loss selling as prices fell further than at that time.

After the declaration and lifting of martial law, the stock market fell below the 2400 level, causing extreme fear among individuals, who are now gradually easing their panic. However, since the main causes of the market decline?exchange rates, macroeconomic conditions, and the impeachment political situation?have not been fundamentally resolved, the indecisive behavior of individuals is expected to continue for the time being.

Researcher Kang Dae-seok of Yuanta Securities analyzed, "After individual investors’ stop-loss selling, the market tends to shift from price adjustment to time adjustment," adding, "It is estimated that stop-loss selling occurred as the stock price fell below the August 5th low."

Like individuals, foreigners are also unable to find a clear trend. Foreign investors net bought 104.9 billion won in the securities market on the 9th but switched from net buying to net selling on the 10th. However, they engaged in bottom-fishing in the KOSDAQ market on the 10th, purchasing 291.1 billion won. On the day, they showed selling pressure in both the securities and KOSDAQ markets. As of 9:50 a.m., foreigners had a selling advantage of about 120 billion won across both markets.

Institutions are responding by monitoring the supply and demand of individuals and foreigners in both the securities and KOSDAQ markets. In particular, pension funds played the role of firefighters by net buying about 900 billion won over five days to extinguish urgent fires. Institutions, which had defended the indices with storm buying in both markets, showed a selling advantage on the 11th. As of 9:50 a.m., they recorded a selling advantage of 46.1 billion won and 29.6 billion won in the securities and KOSDAQ markets, respectively.

Political uncertainty remains ahead of President Yoon’s second impeachment vote scheduled for the coming weekend, but experts advise against rash selling driven by fear.

Researcher Park Seung-young of Hanwha Investment & Securities said, "Individual net selling is because they are disappointed with the Korean market and moving to the U.S. market, and because accumulated price declines have caused credit shortages," adding, "You have to buy when others don’t want to sell, and sell when others don’t want to buy. Now, buying is a more appropriate response than selling."

However, he viewed that immediate buying is not a good timing. Researcher Park said, "Buying can be delayed until consecutive bullish candlesticks with closing prices higher than opening prices accumulate," adding, "Since 2020, the market has shown an upward trend only after such bullish candlesticks accumulated. The stock market entered an excessive fear phase on the 9th, but the selling power of the public was still strong. It is better to confirm when their power weakens and then buy."