'Foreign and Institutional Selling Bombardment' Plunge Market... "Semiconductor and Automobile Leading Stocks Status Remains"

NH Investment & Securities, KOSPI Band 2870~3150... Cyclical Stocks Maintain Leading Position

Photo by Korea Exchange

[Asia Economy Reporter Lee Seon-ae] The domestic KOSPI and KOSDAQ indices plunged sharply due to a selling bomb by foreigners and institutions, creating severe volatility. On the 29th, the KOSPI index closed at 2,976.21, down 92.84 points (-3.03%) from the previous day. The KOSDAQ index ended the session at 928.73, down 32.50 points (-3.38%). Individual investors were the only net buyers, attempting to defend against the index decline, but it was insufficient to withstand the dual selling offensive from foreigners and institutions.

On the 30th, the securities industry raised their voices saying that due to the increasing uncertainty in the stock market, a 'time for confirmation' is needed as the stock investment strategy for next week.

NH Investment & Securities presented the KOSPI band as 2870?3150 for next week's market investment strategy, stating that while there are both upward and downward factors, it is not yet the time for the upward trend to break.

As upward factors, they cited expectations for additional stimulus measures from the Joe Biden administration and reaffirmation of accommodative monetary policy; as downward factors, concerns over vaccine supply delays and overestimation of growth stocks' earnings were mentioned.

Researcher Dong-gil Noh of NH Investment & Securities explained, "Concerns over COVID-19 vaccine supply delays have increased volatility in the global stock market," adding, "It will take time until vaccine supply stabilizes, and there is a possibility of adjusting expectations regarding the speed of economic recovery." However, he judged that expectations for economic improvement due to vaccine supply have not been completely dashed.

Researcher Noh emphasized, "Institutional selling may continue for the time being, but the downside of risk asset preference is supported, and it is not yet the time for the stock market's upward trend to break."

He assessed that the sectoral adjustment range will be larger for cyclical stocks. The supply and demand environment surrounding large-cap stocks is expected to be less favorable compared to mid-cap and small-cap stocks on the KOSPI. Nevertheless, their status as leading stocks is expected to remain unchanged.

Researcher Noh advised, "In the phase where the upward trend recovers after a short-term correction, cyclical stocks such as semiconductors will still hold their leading stock status," and added, "I hope investors take the point when price attractiveness rises as a buying opportunity for these sectors and keep an eye on semiconductors and automobiles as sectors of interest."

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