"Foreigners Return, but Caution on Volatility"... If Samsung Electronics Survives, It Will Touch the Upper Bound of the Box Range

On the 15th, KOSPI opened at 3,108.70, up 8.12 points (0.26%) from the previous trading day, as employees were working in the Hana Bank dealing room in Jung-gu, Seoul. KOSDAQ opened at 965.83, up 1.52 points (0.16%) from the previous trading day. The won-dollar exchange rate started at 1,105.0 won, down 2.0 won from the previous trading day. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Lee Seon-ae] The Korean stock market resumed trading four days after the Lunar New Year holiday and is currently on an upward trend. Foreign investors are returning, absorbing the sell-off from individuals and institutions. However, securities firms emphasize the need to monitor whether foreigners will continue their net buying trend and warn to be cautious of volatility.

As of 12:41 PM on the 15th, the KOSPI is up 44.10 points (1.42%) from the previous trading day, standing at 3144.61. The index started the day at 3108.70 and even surpassed the 3150 mark during the session. The KOSDAQ is up 15.88 points (1.65%) at 980.18. It opened at 965.83, up 1.52 points (0.16%), and has been climbing toward 980.

The rise is interpreted as driven by foreign demand. Individuals are net selling approximately 363.7 billion KRW and 62.7 billion KRW in the KOSPI and KOSDAQ markets, respectively. Institutions switched from a buying advantage early in the session to a selling advantage and are currently selling about 135.7 billion KRW in the KOSPI market. In the KOSDAQ market, they are net buying about 2.1 billion KRW. Meanwhile, foreigners are net buyers in both markets, purchasing approximately 482.6 billion KRW in the KOSPI and 167.2 billion KRW in the KOSDAQ. Essentially, foreigners are absorbing the sell-off from individuals and institutions, who are realizing profits amid concerns that the market will continue to trade within a range, as well as asset allocation strategies by pension funds.

The return of foreign investors is attributed to expectations of economic recovery. An So-eun, a researcher at IBK Investment & Securities, said, "During the domestic Lunar New Year holiday, major global stock markets maintained a risk asset preference based on expectations of economic recovery," adding, "The U.S. stimulus package and COVID-19 vaccine news are expected to be driving forces behind the rise in the domestic stock market." Currently, the U.S. Congress is pushing a $1.9 trillion stimulus plan. The Democratic Party aims to pass the bill in the House by the end of February and implement it by March 14.

However, it remains to be seen whether the foreign investors' return trend will continue. It is difficult to judge based on today's supply and demand alone. Securities firms expect the KOSPI to trade within a band of 3000 to 3200 for the time being, forecasting continued sideways movement within this range.

The supply and demand of Samsung Electronics is also an important factor in gauging the market direction. Experts believe that as long as Samsung Electronics shows an upward trend, the market will turn upward even within the trading range. As of 12:51 PM, Samsung Electronics is trading at 84,200 KRW, up 3.19%. It surged to 84,500 KRW during the session.

Kim Young-hwan, a researcher at NH Investment & Securities, explained, "After the holiday, the Korean stock market is expected to test the upper end of the 3000-3200 box range, driven by domestic and international policy expectations," adding, "Due to strong exports to the U.S., attention should be paid to the semiconductor and automobile sectors, and due to expectations of easing social distancing measures and the start of vaccinations, the retail and apparel sectors should also be considered."

Especially on the premise that Samsung Electronics remains strong, abundant liquidity is expected to prevent a sharp decline even during the sideways trading period. Jung In-ji, a researcher at Yuanta Securities, said, "The KOSPI is showing relative momentum slowdown after a sharp rise, and it is a difficult time for strong directional moves, but liquidity flow is currently not bad," adding, "Although the recent 20-day moving average of the KOSPI has turned downward and is acting as resistance, indicating somewhat insufficient upward energy, considering the recent movements, it can be understood as following the steady global stock market trend."

Seo Sang-young, a researcher at Kiwoom Securities, emphasized, "Although there are various factors increasing volatility, even if a correction continues, the market will not fall significantly due to high liquidity."

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