[Weekly Market Review] 3 Consecutive Years of 'October Market' Being Uninteresting... KOSPI Falls to 2260 Level

[Asia Economy Reporter Oh Ju-yeon] In the last week of October, the KOSPI closed at the 2260 level due to simultaneous selling by foreigners and institutions. The KOSDAQ index also fell, dropping to the 700 level. Over the past three years, the domestic stock market has shown weakness every October, and this year, the KOSPI, which had risen to 2400, closed below the 2300 level at the end of the month.

[Image source=Yonhap News]

According to the Korea Exchange on the 31st, the KOSPI fell from 2343.91 on the 26th to close at 2267.15 on the 30th. The momentum of the rise since March has significantly weakened due to the upcoming U.S. presidential election in November, the resurgence of COVID-19, and the strengthening of major shareholder capital gains tax standards.

The KOSPI has shown poor index growth every October since the crash in October 2018 through last year and this year. In 2018, when the U.S.-China trade conflict escalated, the domestic stock market crashed with the KOSPI falling 323.93 points in October. On October 1, 2018, the KOSPI was at 2338.88, but by the 30th, it had dropped 13.85% to 2014.95. During the trading day, it even fell to the 1985 level.

Last year, the KOSPI closed at 2080.27 on October 30, up 7.85 points from 2072.42 on October 1, but the momentum was weaker compared to the rise in September.

This October, the market showed weakness due to uncertainties such as the global resurgence of COVID-19 and the U.S. presidential election. Although it rose to 2418.89 intraday on the 13th, it is currently down more than 150 points from that level. France and Germany announced economic lockdowns due to uncontrollable COVID-19 spread, and in the U.S., the daily average number of confirmed cases exceeded 70,000, increasing by about 20% compared to the previous week, expanding fear sentiment.

Experts say that regardless of whether President Donald Trump or Democratic candidate Joe Biden wins the election, if the current COVID-19 situation does not improve, the possibility of economic lockdowns in the U.S. cannot be ruled out, and investment sentiment may remain subdued for the time being.

However, individual investors bought a net 2.5437 trillion KRW worth of stocks in the KOSPI market in the last week of October, engaging in 'buying at the bottom.' This contrasts with foreigners and institutions, who sold 1.5 trillion KRW and 1 trillion KRW worth of stocks, respectively.

Notably, from the 1st to the 23rd of the month, individuals had shown a 'selling' trend with net sales of 1.27 trillion KRW, so it is interpreted that they viewed the previous week's market decline as a buying opportunity and increased their holdings.

The stock most purchased by individuals last week was Samsung Electronics, with purchases totaling 1.2 trillion KRW. During the crash in March, individuals had heavily bought large-cap stocks such as Samsung Electronics and SK Hynix, supporting the index and later earning substantial profits through price increases.

Samsung Electronics' stock price plunged from the 61,000 KRW range last month to 56,600 KRW at the close on the 30th. However, individuals are understood to be increasing their holdings with a long-term view, expecting price rises next year.

Following Samsung Electronics, individuals also net bought KODEX Leverage, SK Hynix, SK Telecom, Celltrion, Kakao, Korea Electric Power Corporation, Amorepacific, SK, and SK Innovation in that order.

The securities industry expects uncertainty to continue ahead of the U.S. presidential election. However, after reflecting short-term negative and positive factors, the market is expected to shift its focus to fundamentals, and from a mid- to long-term perspective, it is seen as an opportunity to increase holdings.

Lee Kyung-min, a researcher at Daishin Securities, said, "With liquidity and policies, a direction and trend of economic recovery will be established." He added, "Although speed adjustments due to the spread of COVID-19 are inevitable, economic recovery is expected to continue through next year." He further stated, "Currently, the economic recovery trend is valid, but it is in a speed adjustment phase. Although there may be short-term corrections, this is why it is seen as an opportunity to increase holdings."

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