Pension Funds Buy for the First Time in 51 Trading Days, Foreigners Also 'Buy'... Amid 'Boxpi' Pressure, Only Individuals Are 'Obsessed with Profit-Taking'

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 12th, the domestic stock market, which started higher, is gaining momentum after a long time. While foreigners and institutions are buying together, only individual investors, tired of the 'rollercoaster' market, are net sellers.

On this day, the KOSPI opened at 3,030.73, up 0.57% from the previous day. The KOSDAQ started the session at 910.41, up 0.26%. Both KOSPI and KOSDAQ are increasing their gains by more than 1%. As of 10:52 a.m., the KOSPI is up 1.42% at 3,056.45. The KOSDAQ is showing a 1.64% rise at 922.91.

As the volatile market continues, individual investors have become uneasy and are showing a selling bias. Individuals are net selling about 324.1 billion KRW and 22.3 billion KRW in the KOSPI and KOSDAQ markets, respectively. On the other hand, foreigners continue to be net buyers today as well, following yesterday. The Korean stock market showed a strong upward trend due to foreigners' net buying of spot and futures on the futures and options expiration day. Currently, foreigners are net buying about 166.1 billion KRW in the KOSPI market and 36.4 billion KRW in the KOSDAQ market. Institutions are selling about 15.1 billion KRW in the KOSDAQ market but buying about 157.8 billion KRW in the KOSPI market. The pension funds, which had recorded net selling for 50 consecutive trading days until the previous day, switched to net buying on the 51st trading day. As of 10:55 a.m., pension funds are net buying about 105.6 billion KRW and 4 billion KRW in the KOSPI and KOSDAQ markets, respectively. Previously, pension funds had continued a 'selling' streak for 50 consecutive days from December 24 last year until the previous day. During this period, the net selling amount exceeded 14 trillion KRW. However, the industry expects that the pension funds' selling trend is likely to continue further. According to the fact that the National Pension Fund's asset management scale has increased by about 64 trillion KRW annually on average in recent years, pension funds need to dispose of 26 trillion KRW worth of domestic stocks this year. Since pension funds have net sold about 14 trillion KRW so far this year, it is calculated that they need to dispose of an additional 12 trillion KRW.

The domestic stock market is expected to continue its volatile trend for the time being. Kiwoom Securities researcher Seo Sang-young said, "When the European Central Bank (ECB) announced an expansion of bond purchase speed, interest rates stabilized, and supported by this, the Philadelphia Semiconductor Index showed a strong 4.09% gain in the U.S. stock market, and the Nasdaq, centered on tech stocks, surged, which will have a positive impact on the Korean stock market." He added, "However, with U.S. and China’s real economy indicators and the Federal Open Market Committee (FOMC) meeting next week ahead, rather than showing continuous strong gains in a certain direction, the market is expected to continue to show significant sectoral differentiation and large fluctuations."

Hana Financial Investment researcher Lee Jae-sun also said, "The domestic stock market is likely to continue a volatile trend due to major countries' inflation and domestic demand indicators, which act as factors for interest rate direction, and the upcoming U.S. March 17 FOMC meeting," adding, "There is no clear possibility of a trend-based improvement in risk asset preference sentiment."

While the outlook that the KOSPI will be trapped in a 'Boxpi' (box range market) is dominant, securities firms recommend focusing on cyclical stocks for now. Cyclical stocks refer to those affected by economic fluctuations. Generally, steel, petrochemicals, and construction are representative sectors. Expectations for economic recovery, such as COVID-19 vaccines, have raised hopes that stock prices will rise again from the second quarter.

IBK Investment & Securities researcher An So-eun said, "In the short term, the market is expected to show a Boxpi trend until the end of March," adding, "While concerns about rising interest rates continue, expectations for economic recovery or earnings will act as momentum for a rebound in the future." She continued, "The effects of additional stimulus payments to be made in the U.S. starting next week and expectations for economic normalization due to COVID-19 vaccines will be important factors," and advised, "In times like recently, when the impact of rising interest rates is significant, I recommend financial sectors or cyclical sectors that have high profit expectations despite the burden of rising interest rates."

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