60% Surge in Two Months... KOSDAQ Recovers Yearly High

[Asia Economy Reporter Koh Hyung-kwang] The KOSDAQ index has surged more than 60% over the past two months, recovering its yearly high. The steady buying by individual investors, mainly in pharmaceutical and bio stocks, along with limited foreign investor outflows, is cited as the driving force behind the rebound. However, concerns over delayed economic recovery due to the novel coronavirus disease (COVID-19) suggest that the upward trend may be limited.

According to the Korea Exchange on the 14th, the KOSDAQ index recorded 693.14 at 10:19 a.m., up 0.23% (1.61 points) from the previous trading day. This is 0.55 points higher than the closing price of 692.59 on February 17, the highest point this year. Compared to the year-end closing price of 669.83 last year, it is 23.31 points higher.

The KOSDAQ index repeatedly declined after the COVID-19 pandemic and plunged to a yearly low of 428.35 on March 19. Since then, it has rebounded to the yearly high in less than two months with a rapid recovery. The increase rate during this period reached 61.8% (264.79 points).

Although the KOSPI also continues to rebound, it has not matched the momentum of the KOSDAQ index. The KOSPI closed at 1940.42, up 0.95% (18.25 points) from the previous trading day. In terms of returns since the beginning of the year (2197.67), the KOSPI still records a double-digit negative return (-11.6%), but compared to the yearly low of 1457.64 on March 19, it has only rebounded 33.1%.

The solid upward trend of the KOSDAQ index is interpreted as being due to the influx of individual investors' buying and limited foreign investor outflows. Lee Kyung-min, a researcher at Daishin Securities, explained, "In the stock market, selective buying is occurring mainly in untact (contactless) and bio sectors. Especially since these sectors dominate the KOSDAQ market, the rise has been significant."

However, experts predict that a sustained upward trend will be difficult to maintain. Seo Sang-young, a researcher at Kiwoom Securities, said, "With corporate earnings forecasts continuously declining due to COVID-19, if stock prices rise, valuation burdens are inevitable. Considering variables such as concerns over the US-China trade dispute, a tug-of-war with profit-taking sales is expected to continue for the time being."

There is a high possibility that an individual stock market will unfold in the future. Son Se-hoon, a researcher at NH Investment & Securities, stated, "Due to uncertainties about the second-quarter earnings, which are greatly affected by COVID-19, further rises will be limited. It is likely to be an individual stock market focused on companies with a high possibility of good second-quarter earnings."

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