[Weekly Market Outlook] KOSPI Faces Short-Term Correction, Is It Time for 'Gobbus' Retail Investors to Smile?

[Asia Economy Reporter Oh Ju-yeon] As domestic and international stock markets have surged sharply, the outlook that a short-term correction is inevitable is gaining traction. This is because the gap between the stock market, which rose on expectations, and the real economy, which has been depressed due to the novel coronavirus infection (COVID-19), has widened, leading to an analysis that there will be a period to narrow this difference for the time being.

While price adjustments are made for stocks that have been on a rising rally, it is expected to be a 'painful' time for market participants in the stock market. Conversely, attention is focused on whether this could be an opportunity for the so-called 'Gopbus Ants' who have been accumulating inverse exchange-traded funds (ETFs) worth about 2.5 trillion won since the crash on March 19.

According to the Korea Exchange on the 14th, individuals have scooped up 2.5573 trillion won worth of 'KODEX 200 Futures Inverse 2X' from March 19 to the 12th of this month.

When the KOSPI fell to the 1400 level intraday in March, reaching a peak of market fear, individuals continuously bought inverse ETFs that move in double the inverse of the index's downward volatility, betting on further index declines. With the thought of 'it will fall once someday,' individuals bought more than 100 billion won worth of inverse ETFs daily for 14 trading days from March 24 to April 10, but had no chance to 'escape' during that time.

For investors who accumulated inverse ETFs too early, the stocks they bought in the 10,000 won range dropped to the 5,000 won range before the awaited correction arrived. However, the securities industry expects that this correction will not fall as sharply as it did in March. The consensus among securities firms is that the first support level is in the low 2000s.

Lee Kyung-min, a researcher at Daishin Securities, said, "The first support level based on the KOSPI is in the low 2000s where the 120-day and 200-day moving averages are located, and the second support level is around 1900 where the 60-day moving average is positioned."

Lee added, "Considering the retracement ratio, it seems necessary to check whether support is secured in the early 1900s (38.2% retracement of the rise)," and analyzed, "At this point, it is necessary to delay the buying timing rather than take aggressive action."

However, he forecasted that the possibility of this correction forming a 'W-shaped' pattern is low.

Lee emphasized, "Monetary, financial, and fiscal policies have already entered at a scale far exceeding the financial crisis level, and economic activity normalization in the U.S. and Europe is underway," adding, "This means the economic recovery trend will continue."

NH Investment & Securities projected the KOSPI expected band for next week to be between 2050 and 2130.

Labor Gil, a researcher at NH Investment & Securities, diagnosed, "Due to concerns about a second wave of COVID-19 in the U.S., the domestic stock market inevitably has to slow down," and said, "A strategy that differentiates by sector rather than betting on the index itself is effective." He added that defensive stocks could be a relatively better alternative, saying, "Defensive sectors such as utilities, telecommunications, and essential consumer goods within the KOSPI have underperformed the benchmark in terms of monthly and weekly returns, but the fact that they were sidelined during the rising phase due to expectations of economic improvement increases the likelihood that they will try to catch up in future returns."

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