KOSPI Rises on Imminent US Fiscal Spending Agreement... KOSDAQ Challenges Recovery Above 500 Points

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[Asia Economy Reporter Eunmo Koo] The KOSPI is showing an early session uptrend, continuing the strong performance from the previous day. This is interpreted as being influenced by expectations that the large-scale fiscal stimulus package being pushed by the U.S. government is close to passing Congress. The KOSDAQ index is also recovering the 500 level with an increase of nearly 4%.

On the 25th, the KOSPI opened at 1,668.19, up 58.22 points (3.62%) from the previous trading day. The KOSPI, which started the day higher, is maintaining a rise of around 4%, supported by net buying from individual investors. As of 9:30 a.m., it was trading at 1,671.05, up 61.08 points (3.79%) from the previous day.

The previous day, the KOSPI closed at 1,609.97, up 8.60% from the previous trading day, thanks to emergency measures by the U.S. Federal Reserve (Fed). The Fed’s announcement of unlimited quantitative easing eased concerns about liquidity shortages, and the government’s unveiling of a 100 trillion won livelihood financial stability package further expanded the index’s gains. Although the failure of bipartisan U.S. Congress to agree on a $2 trillion economic stimulus bill remains a burden, U.S. Treasury Secretary Steven Mnuchin eased concerns by stating that discussions between Democrats and Republicans are close to an agreement.

Overnight, major indices on the New York Stock Exchange (NYSE) surged on expectations that the large-scale fiscal stimulus package being pushed by the U.S. government is close to passing Congress. On the 24th (Eastern Time), the Dow Jones Industrial Average closed at 20,704.91, soaring 2,112.98 points (11.37%) from the previous day. The Standard & Poor’s (S&P) 500 index rose 209.93 points (9.38%) to 2,447.33, and the tech-heavy Nasdaq closed at 7,417.86, up 557.18 points (8.12%).

Sangyoung Seo, a researcher at Kiwoom Securities, said, “The news that the U.S. fiscal spending agreement is imminent, considering that support will be provided to the U.S. energy and aviation sectors, raises expectations for easing U.S.-originated credit risk, which increases risk asset preference.” He added, “This will have a positive impact on foreign investors’ supply and demand, who have been continuously selling.” He also forecasted, “The easing of COVID-19 concerns in Asian markets and the increased possibility of supply chain normalization will also positively affect the Korean stock market.”

He said, “Of course, considering the sharp rise in the Korean stock market the previous day, a temporary selling wave cannot be ruled out, but factors that raise expectations for a rise after escaping the decline have been continuously emerging, so the upward trend is likely to continue.”

Looking at the current trading trends by participant, individual investors who had turned to selling the previous day have switched to buying in just one day, leading the index’s rise. Individual investors are net buyers of 479.7 billion won, while institutional and foreign investors are net sellers of 424.3 billion won and 40.7 billion won, respectively.

By sector, transportation equipment, warehousing and transportation, banking, securities, and steel & metals are rising.

Most of the top market capitalization stocks are rising. Hyundai Mobis is showing strength with a surge of over 10%, and Hyundai Motor, LG Chem, Samsung SDI, Samsung Electronics, and SK Hynix are also rising.

Currently, in the KOSPI market, 873 stocks are rising, including two stocks hitting the upper price limit, 20 stocks are falling with no stocks hitting the lower price limit, and 9 stocks are unchanged.

The KOSDAQ index is also continuing its upward trend with net buying by individual investors. The KOSDAQ index opened at 496.32, up 16.92 points (3.31%) from the previous trading day, and showed an early session recovery above the 500 level. As of 9:30 a.m., it was trading at 497.47, up 17.07 points (3.55%) from the previous day.

Looking at the current supply and demand situation, similar to the KOSPI, individual investors are leading the index’s rise with net buying of 98.5 billion won. Meanwhile, institutional and foreign investors are net sellers of 58.5 billion won and 43.4 billion won, respectively.

By sector, medical precision instruments, transportation, non-metallic minerals, machinery equipment, and computer services are rising.

Most of the top market capitalization stocks are rising. Seegene and Celltrion Pharm are showing double-digit gains, and CJ ENM, EcoPro BM, SK Materials, and Genexine are also rising.

Currently, in the KOSDAQ market, 1,272 stocks are rising, including seven stocks hitting the upper price limit, 34 stocks are falling with no stocks hitting the lower price limit, and 21 stocks are unchanged.

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