[Weekly Market Review] KOSPI Recovers to 2200 Level After 5 Months... "No Change in Leading Stocks"

Foreigners Favor Samsung Electronics, Hyundai Motor vs Individuals Prefer Naver, Kakao
As Index Recovers to 2200 Level, Shift to Buying 'KODEX200 Futures Inverse 2X'

[Asia Economy Reporter Oh Ju-yeon] In the second week of July (13th-17th), the KOSPI index recovered the 2200 mark at closing, supported by buying from foreigners and institutions. This is the first time in about five months since February, just before the sharp plunge in the stock market due to the novel coronavirus infection (COVID-19), that the KOSPI has reclaimed the 2200 level. Amid rising expectations for COVID-19 vaccines and additional economic stimulus measures, sectors such as internet, secondary batteries, semiconductors, and pharmaceutical & bio industries are expected to continue playing a leading role.

On the 15th, the KOSPI index opened at 2210.89, up 26.80 points (1.23%) from the previous trading day (2176.43). Dealers are busy at work in the Hana Bank dealing room in Jung-gu, Seoul. In the foreign exchange market, the won-dollar exchange rate started at 1203.0 won, down 2.7 won from the previous trading day (1204.6 won). Photo by Kim Hyun-min kimhyun81@

According to the Korea Exchange on the 18th, the KOSPI closed at 2186.06 on the 13th and ended at 2201.19 on the 17th. The last time the KOSPI closed above 2200 was on February 19 (closing price 2210.34), about five months ago, when the domestic spread of COVID-19 began in earnest.

By investor type, individuals and institutions sold a net 283.3 billion KRW and 7.1 billion KRW respectively, while foreigners bought a net 371.2 billion KRW. The stock most purchased by foreigners was Samsung Electronics, with 498 billion KRW worth bought. This was followed by Hyundai Motor (144.5 billion KRW), LG Electronics (97.2 billion KRW), Kumho Petrochemical (42 billion KRW), LG Household & Health Care (39.2 billion KRW), Kia Motors (33.2 billion KRW), and Amorepacific (26 billion KRW). Stocks that rose significantly, such as Naver and Kakao, were sold by foreigners for profit-taking, with net sales of 119 billion KRW and 89.8 billion KRW respectively.

Individuals absorbed these sales. They bought Naver and Kakao with net purchases of 269.2 billion KRW and 251.7 billion KRW respectively, ranking first and second in net buying. However, they sold Samsung Electronics and Hyundai Motor for profit-taking, with sales of 592.5 billion KRW and 265.7 billion KRW respectively. Other top net purchases by individuals included SK Hynix (166.8 billion KRW), LG Chem (161 billion KRW), NCSoft (80.3 billion KRW), SK Biopharm (62.8 billion KRW), and LG Innotek (52.7 billion KRW).

In the securities industry, it is viewed that internet companies like Naver and Kakao, secondary battery makers such as LG Chem, semiconductor, and pharmaceutical & bio sectors are likely to continue as leading stocks. Individuals appear to be adding these stocks to their portfolios whenever they undergo corrections.

Lee Kyung-min, a researcher at Daishin Securities, explained, "The global stock market leaders are growth stocks," adding, "In the Korean market, we maintain a strategy to increase weights in internet, secondary battery, semiconductor, and pharmaceutical & bio sectors." He noted, "Leading stocks tend to lead the market during uptrends but show relatively larger declines during short-term corrections," and added, "Stocks or sectors that show strength during price or time corrections within an uptrend cannot be considered leaders." He analyzed that during previous uptrends in 2007 (China-related stocks), 2011 (Cha-Hwa-Jeong), and 2017 (IT), the leading stocks changed and the upward momentum did not continue uninterrupted.

Meanwhile, individuals have recently shortened their betting cycles on index rises or falls to about a week. As the KOSPI fluctuates between 2100 and 2200, individuals adjust their betting intensity on inverse and leveraged ETFs on a weekly basis.

From June 29 to July 3, the last week of June, the most purchased stock by individuals was 'KODEX 200 Futures Inverse 2X', with net buying of 210.7 billion KRW over the week. During this period, the KOSPI rose 2.81% from 2093.48 to 2152.41. Although the index was rising, individuals expected a decline and sold 115.4 billion KRW worth of KODEX Leverage.

Then, in the first week of July (6th-10th), as the KOSPI broke through 2200, individuals sharply switched to leverage, net buying 62.8 billion KRW of KODEX Leverage and selling 84.1 billion KRW of KODEX 200 Futures Inverse 2X, showing a contrasting response to the previous week. Notably, on Friday the 10th, when the index closed down, individuals net bought 70.2 billion KRW worth of KODEX Leverage, and on the next trading day, Monday the 13th, the index rebounded over 1%, with KODEX Leverage rising 3.84%. On the day of the sharp rise, individuals again accumulated inverse ETFs.

Last week, individuals realized profits by selling 162.9 billion KRW worth of KODEX Leverage, while buying 136.4 billion KRW worth of KODEX 200 Futures Inverse 2X to prepare for a potential downturn.

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