Institutional and Foreign Investors Sell Together While Individuals Buy Alone... KOSPI Struggles

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 22nd, the domestic stock market showed a box range trend, repeatedly switching between rises and falls after a slight upward start.

On this day, the KOSPI index started at 3040.01, up 0.48 points from the previous trading day, and the KOSDAQ index began at 953.04, up 0.93 points. As of 10:55 AM, the KOSPI was down 0.21% at 3033.09, while the KOSDAQ was up 0.13% at 953.37.

The market appears to be directly influenced by the mixed closing of the U.S. stock market. On the 19th (local time), the New York stock market closed mixed.

The Dow Jones Industrial Average fell 0.71%, and the Standard & Poor's (S&P) 500 index also dropped 0.06%. The tech-heavy Nasdaq index closed up 0.76%. Despite the U.S. Federal Reserve's (Fed) reaffirmation of its low interest rate policy, unease in the bond market persisted. The 10-year Treasury yield even surged to 1.75% during the session.

Seosangyoung, a researcher at Kiwoom Securities, explained, "The Fed has decided to end the Supplementary Leverage Ratio (SLR) relief measure, which excludes Treasury bonds and reserves from banks' required capital calculation ratios, as scheduled at the end of this month. This could force banks to sell Treasury bonds due to increased costs of holding them, potentially accelerating the rise in interest rates."

Institutions and foreigners are selling simultaneously, while individuals are buying alone, resulting in a tug of war. Individuals are net buying 498.7 billion KRW and 116.8 billion KRW in the KOSPI and KOSDAQ markets, respectively. Conversely, institutions are net selling 136 billion KRW and 37.5 billion KRW in the KOSPI market. Foreigners are also selling 371 billion KRW and 77 billion KRW in both markets, respectively.

Han Ji-young and Chae Hyun-gi, researchers at Cape Investment & Securities, said, "The KOSPI still cannot find a direction and is only creating volatility," adding, "The upward factor is the market's reduced sensitivity to rising interest rates, while the downward factor is the possibility of further market interest rate increases due to the Fed's insufficient crisis management."

However, they added, "The current interest rate rise causing market anxiety is a temporary concern, and the 1.7% level on the U.S. 10-year Treasury is likely a short-term peak. This suggests that sensitivity to interest rates will decrease as the month progresses, so it is advisable to refrain from selling at this point in time."

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