Donghak Gaemi, 'Strong Buying March' Despite Index Decline

From the 13th to 20th, while KOSPI fell 6.7%, individuals net bought 1.7559 trillion KRW worth

[Asia Economy Reporter Oh Ju-yeon] Individual investors have once again emerged as saviors in the stock market, which plunged sharply due to concerns over the resurgence of the novel coronavirus infection (COVID-19) and delays in global economic recovery. When the KOSPI fell to the 1400 level last March, individuals who engaged in bargain buying have not significantly reduced their net buying volume during this recent market decline. In particular, they are focusing on large blue-chip stocks such as Samsung Electronics, SK Hynix, and Hyundai Motor, suggesting that they view this decline as a 'short-term correction.'

According to the Korea Exchange on the 21st, an analysis of individual net buying volumes at weekly intervals over the past month showed that the accumulation increased during periods when the index fell. From the 16th to the 23rd of last month, individuals net bought stocks worth 1.065 trillion KRW in the KOSPI market, but from the 23rd to the 30th, they turned to net selling, offloading stocks worth 230.1 billion KRW. They bought while the index hovered between 2180 and 2210 points and realized some profits after the index surpassed the 2250 level. As of the closing price on the 30th, the KOSPI recorded 2267.01, exceeding the previous resistance level of 2250.

From the 30th of last month to the 6th of this month, and from the 6th to the 13th, as the index rose to the 2400 level, individuals net bought 1.6326 trillion KRW and 1.4522 trillion KRW respectively, expecting further gains. This momentum continued, and from the 13th to the 20th, while the KOSPI fell 6.70% from 2437.53 to 2274.22, individuals net bought stocks worth 1.7559 trillion KRW, defending against the index decline. This is the largest weekly net buying volume in the past month. It is interpreted that individuals are continuing to buy, viewing this market decline as a short-term adjustment rather than a sharp drop like in March.

Lim Sung-chul, a researcher at Heungkuk Securities, analyzed, "The ability to respond to COVID-19 has been strengthened, and the Federal Reserve's (Fed) accommodative policy stance is likely to continue for the time being. Since this correction occurred due to fatigue from the recent rally, it is unlikely that a sharp drop like in March will be repeated."

This month, the top stock in terms of net buying by individuals was SK Hynix (1.1975 trillion KRW). Following were Samsung Electronics (810.1 billion KRW), LG Chem (773.0 billion KRW), Hyundai Motor (541.8 billion KRW), Samsung SDI (418.1 billion KRW), and Kakao (388.5 billion KRW).

In particular, when the KOSPI plunged 3.66% the previous day, individuals bought the most of Samsung Electronics (315.5 billion KRW), NCSoft (92.1 billion KRW), and SK Hynix (84.3 billion KRW). As of 10:08 AM that day, the KOSPI recovered to the 2300 level and rose by over 1%, and although a small amount of selling by individuals appeared, it was minor (-5.9 billion KRW) compared to the previous day's net buying volume of over 1 trillion KRW.

However, there is an analysis that the buying intensity is somewhat cautious. Seo Sang-young, a researcher at Kiwoom Securities, diagnosed, "Rather than an active buying trend across the market, individuals are showing a cautious approach by bargain buying mainly in stocks with large price drops." Lee Jae-sun, a researcher at Hana Financial Investment, forecasted, "Next week, the domestic stock market is expected to see some rebound buying, but with the possibility of further COVID-19 spread and upcoming major global events, a wait-and-see sentiment will prevail."

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