[Good Morning Stock Market] 'Ne Manyeo-ui Nal'... Will the KOSPI Rally Continue?

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] On the 10th, attention is focused on whether the KOSPI will continue its rally even on this year's last 'Four Witching Day.' On the 9th, the KOSPI closed at 2755.47, up 2.02% from the previous trading day, setting an all-time high record.

Four Witching Day is the day when the expiration dates of four types of derivatives?index futures, index options, individual stock options, and individual stock futures?coincide. In Korea, it falls on the second Thursday of March, June, September, and December each year. Usually, the market experiences volatility with a flood of closing trades at the end of the session, resulting in an overall decline in the stock market.

◆ Hi Investment & Securities Research Center = The three major U.S. stock markets started higher together but closed lower amid concerns over fiscal stimulus. The Nasdaq index plunged about -1.9%, mainly due to declines in large tech stocks such as Facebook's antitrust lawsuit and Tesla's sharp drop. The domestic market is expected to face downward pressure due to the U.S. stock market decline and fiscal stimulus concerns. The sharp decline centered on major U.S. tech stocks is likely to have a negative impact on Korean tech stocks. In particular, attention should be paid to volatility due to futures and options expiration.

◆ Han Daehoon, SK Securities Researcher = The KOSPI rose 14.3% throughout November. The domestic stock market, which had been struggling due to the novel coronavirus infection (COVID-19), has now reached an all-time high. Recently, opinions are divided between those who believe the market will continue its upward trend and those who see the possibility of a correction due to short-term overheating. Major upcoming events next week, such as difficulties in U.S. stimulus negotiations and the U.S. Electoral College vote, could spread a wait-and-see stance. The upward trend is expected to remain valid until next year, but it is necessary to keep open the possibility of short-term sideways movement depending on the outcomes of these events.

◆ Noh Donggil, NH Investment & Securities Researcher = The most important event this week is the December futures and options simultaneous expiration. Since the September simultaneous expiration, foreigners have net bought about 37,000 contracts of KOSPI 200 futures. Considering rollover, the foreign buying position is estimated to be around 60,000 contracts. Whether foreigners roll over their KOSPI 200 futures is expected to provide important clues for the short-term direction. However, foreign futures buying has recently slowed, and they have shown a passive stance toward the replacement of the front-month contract. If major investors show a clear direction after the simultaneous expiration, considering foreigners' net buying trend in the spot market and the possibility of spot net buying to secure year-end dividend income by financial investors, a favorable environment for large-cap stocks is expected to continue.

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