KOSPI 2200 Reopens, DNA Has Changed

Concerns Over Economic Recession Grow but Stock Market Rises
Donghak Ants Lead Record High April Individual Trading
Impact of Corona Boosts Non-Face-to-Face and Bio Stocks

[Asia Economy Reporter Song Hwajeong] The KOSPI has recently been rising continuously, approaching a stable position above the 2200 mark. During the rebound of the KOSPI following the plunge caused by the novel coronavirus infection (COVID-19), distinct characteristics different from the past have emerged. These can be summarized as Decoupling, New Stars, and Ants (individual investors). The DNA of the KOSPI is changing.

According to the Korea Exchange on the 11th, the KOSPI has risen 13.43% over the past month. It has increased for nine consecutive trading days recently, rising every day based on closing prices this month without exception. Up to this day, it has touched the 2200 level four days in a row during intraday trading, putting the stable positioning above 2200 within reach.

The characteristics observed during the rapid rebound of the KOSPI were clearly different from before. First, despite growing concerns about an economic recession, the stock market rose rapidly, showing signs of decoupling. The Organisation for Economic Co-operation and Development (OECD) forecasted on the 10th (local time) that if there is no second wave of COVID-19, the global economic growth rate this year will be -6.0%. The OECD projected South Korea's economic growth rate this year at -1.2%. Even in this recessionary environment, the stock prices are strong due to abundant liquidity supported by government policies worldwide. The United States has decided to inject $7.06 trillion (approximately 8472 trillion KRW) after the COVID-19 outbreak. The Eurozone plans to inject €6.25 trillion (approximately 8500 trillion KRW), and South Korea also plans to inject funds amounting to 350.4 trillion KRW following the COVID-19 crisis.

Next, a notable feature is the emergence of new leading stocks. While traditional blue-chip stocks such as electronics and automobiles, which led past market rallies, showed little strength in this rebound, bio stocks and untact (contactless) stocks surged significantly, leading the KOSPI's recovery. Kakao, which gained attention as an untact stock, entered the top 10 in market capitalization during the rebound phase and at one point surpassed Hyundai Motor in market cap. The top market cap stocks, which were once dominated by automobile, steel, and chemical companies, are now occupied by untact stocks like Kakao and NAVER, as well as bio stocks such as Samsung Biologics and Celltrion.

From the supply and demand perspective, this rebound was led by individual investors, which is a different characteristic from before. In the past, the KOSPI moved according to foreigners and institutions, but after COVID-19, the Donghak Ant Movement emerged, with individuals leading the upward trend. According to Yuanta Securities, the trading proportion of individuals reached a record high of 68.4% in April and maintained a high proportion in May (64.6%) and June (68.0%).

Researcher Kim Kwanghyun of Yuanta Securities analyzed, "While institutions and foreigners recorded trading volumes in the 30 trillion KRW range in April and May respectively, individuals traded 147.9 trillion KRW in April, 122.1 trillion KRW in May, and 72.5 trillion KRW in just eight trading days in June." From March to the day before the report, foreigners sold 20 trillion KRW in the KOSPI market, institutions net bought only 1.5568 trillion KRW, but individuals purchased 16.9778 trillion KRW.

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