KOSPI Taking a Breather... Maintaining Around 3210 Level

Foreigners and Institutions Both Sell... KOSDAQ Also Slightly Hesitates

On the 27th, as the KOSPI index showed mixed trends in the early session, dealers were working in the Hana Bank dealing room in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Minwoo Lee] While individual net buying and foreign and institutional net selling continue, the KOSPI is maintaining the 3210 level with little change compared to the previous day. Since the annual earnings expectations remain high not only for the first quarter but also for the whole year, there is an analysis that attention should be paid to sectors where the expectation of profit improvement has not yet been reflected in stock prices.

At 10:42 a.m. on the 27th, the KOSPI recorded 3214.95, down 0.09% from the previous day. After opening at 3218.30, up 0.02% from the previous day, it showed a slightly weak trend. Around 9:49 a.m., it fell to 3205.35, breaking below the 3210 level, but soon rebounded.

Simultaneous selling by foreigners and institutions pulled the index down, but individual buying power is holding it back. Foreigners and institutions net sold 203.4 billion KRW and 99.1 billion KRW respectively, while individuals net bought 307.9 billion KRW.

The number of sectors rising compared to the early session increased, showing a similar proportion to those that declined. The steel and metal sector had the largest gain at 5.03%. This was followed by electric and gas utilities (1.53%), medical precision instruments (1.02%), and construction (0.93%). On the other hand, non-metallic minerals (-1.57%), transportation equipment (-0.88%), and pharmaceuticals (-0.81%) declined.

At the same time, the KOSDAQ also fell 0.53% to 1024.62. After opening at 1030.29, up 0.02% from the previous day, it also turned to a downward trend. However, the decline was not large. Around 9:45 a.m., it dropped to 1023.65 but still remained in the 1020 range.

In the KOSDAQ market as well, only individuals showed net buying. Individuals net bought 100.2 billion KRW, while foreigners and institutions net sold 77.6 billion KRW and 12.1 billion KRW respectively.

Unlike the KOSPI, many sectors in the KOSDAQ market declined. Other manufacturing (-1.60%), digital content (-1.48%), and telecommunications equipment (-1.37%) showed the largest drops. Transportation (2.75%) and food and tobacco (1.85%) rose.

Due to the base effect of COVID-19, expectations for an economic recovery driven by demand are leading to upward revisions of corporate earnings estimates. In the case of the U.S. S&P 500, quarterly estimates have typically been revised downward each quarter (an average decline of -4.2% over the past 10 years), but this year they are being revised upward. The first quarter earnings per share (EPS) estimate increased by 6.0% since the beginning of the year. This is the largest increase since January 2018, when the tax reform bill was passed and estimates were revised upward by +5.4%. The annual earnings estimates are similar. Historically, annual earnings estimates were revised downward by an average of -3.3% during the first quarter, but this year the earnings estimate rose by +5.0%, from $167.3 to $175.7 per share.

The domestic stock market is showing a similar trend. Since the beginning of the year, the upward revision of first quarter operating profit and net profit estimates is at the highest level in the past 10 years. The proportion of top companies with superior operating profit and net profit generation capabilities compared to the KOSPI average is also expected to increase to the highest level since 2015. Researcher Jaeseon Lee of Hana Financial Investment explained, "It is necessary to pay attention to sectors where expectations of profit improvement have not yet been reflected in stock prices," adding, "Among sectors with strong upward revisions of this year’s EPS market consensus in the past month are banks, retail, semiconductors, and cosmetics."

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