The Key Factors for KOSPI Surpassing 2800: 'Foreign Investors and Semiconductors'

[Asia Economy Reporter Song Hwajeong] As the KOSPI shows weakness just one day after hitting an all-time high, the key drivers for the KOSPI's rise have been identified as foreign investors and semiconductors. For the KOSPI to surpass the 2800 mark, sustained buying by foreign investors and upward momentum in Samsung Electronics and SK Hynix are expected to be essential.

As of 9:15 a.m. on the 10th, the KOSPI stood at 2726.52, down 1.05% (28.95 points) from the previous day. Although it rose more than 2% the day before, setting a new record high, it turned bearish within a day.

Looking at the recent record-breaking streak of the KOSPI, whenever foreign investors bought and semiconductors rose, the index inevitably hit new highs. On the previous day, foreign investors net purchased 163.3 billion KRW in the KOSPI. On the 8th, they net sold 852 billion KRW, leading to a decline in the index, but reversed to buying the very next day, pushing the index back to a record high. On this day, foreign investors returned to net selling in the 120 billion KRW range, causing the KOSPI to show weakness.

The KOSPI's movement is closely correlated with semiconductor trends. On this day, Samsung Electronics and SK Hynix fell by about 1% and 3%, respectively. Since the KOSPI began its record-breaking rally on the 23rd of last month, Samsung Electronics has shown a parallel trend. From the 23rd of last month until the day before, the KOSPI experienced three declines, and Samsung Electronics also showed weakness on the same days. SK Hynix had five declines during that period but has shown synchronized movement with the KOSPI and Samsung Electronics since the beginning of this month.

Therefore, for the KOSPI to break through the 2800 level in the future, continued buying by foreign investors and a rise in semiconductors are necessary.

Regarding foreign investor movements, while there is no trend of sustained outflow, the possibility of a wait-and-see stance cannot be ruled out. Ha Daehun, a researcher at SK Securities, said, "Foreign capital has flowed in due to the easing of U.S. political uncertainties such as Biden's election, the high attractiveness of the KOSPI among emerging markets, and the continued strength of the Korean won." He added, "These three factors are expected to continue for some time, so it is difficult to conclude that recent selling is a trend of foreign capital outflow." He further noted, "However, events such as difficulties in U.S. stimulus negotiations, the U.S. Electoral College vote, the Federal Open Market Committee (FOMC), and this year's final simultaneous expiration of futures and options (Quadruple Witching Day) could raise caution and spread a wait-and-see sentiment."

Samsung Electronics is expected to maintain strong earnings, which bodes well for its stock price. A Gyujin, a researcher at DB Financial Investment, said, "Samsung Electronics recently succeeded in a stock price rebound due to expectations of a memory market upturn," adding, "The earnings improvement from rising memory prices is expected to continue through 2022." DB Financial Investment raised Samsung Electronics' target price from 72,000 KRW to 95,000 KRW.

SK Hynix is anticipated to experience strong stock price gains through the first quarter of next year. Park Yuak, a researcher at Kiwoom Securities, said, "The improvement in the DRAM market is occurring very rapidly, and since positive momentum is concentrated from the fourth quarter of this year through the first quarter of next year, which marks the beginning of the memory super cycle, the stock price is expected to record the strongest gains during this period." Kiwoom Securities raised SK Hynix's target price from 140,000 KRW to 150,000 KRW.

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