"Behind the 'Record High Rally': Rotation Dizziness, Rising Market Exclusion, Green Light Accounts... Reassess Investment Strategies"

[Asia Economy Reporter Lee Seon-ae] The KOSPI has been hitting record highs day after day, staging a 'new high rally,' but the majority of individual investors watching this remain gloomy. Various investment communities lament that despite the 'new high party,' their accounts are filled with 'blue lights' (losses). Summarizing most posts, the keywords behind the stock market's new high rally narrow down to being left out of the rising market, rotation trade dizziness, and blue-light accounts. Experts emphasize that individuals need to carefully reconsider their investment strategies to match the era of KOSPI 3300 and KOSDAQ 1000 in order to generate profits.

According to the Korea Exchange on the 28th, analyzing the investment performance of individuals, foreigners, and institutions over the past month (May 25 to June 25) revealed a crushing defeat for individuals. All top 10 stocks by net purchases of institutions rose, boasting a perfect score of 100. Among foreigners' top 10 net purchase stocks, 9 rose except for LG Chem. In contrast, only 4 of the top 10 stocks net purchased by individuals increased. Notably, even the 4 rising stocks are interpreted as not significantly contributing to profits. For example, Samsung Electronics, the top net purchase stock, had a mere price fluctuation rate of 2.13%. Kakao, ranked second, had a fluctuation rate of 30.9%, but during the period when individuals concentrated their net purchases from the 23rd to 25th (589.9 billion KRW net purchase), the stock price actually fell by 8.8%. This indicates that individuals chased purchases belatedly after Kakao's stock price surged. Considering this, it means individuals hardly made money in the rising market.

The reason for this misstep is betting on index declines and late chasing purchases. From the 22nd to the 25th, the four days since the KOSPI rally began, the bets of individuals and institutions completely diverged. Individuals bet on a falling market, while institutions bet on a rising market. Over these four days, individuals net purchased 220 billion KRW worth of KODEX 200 Futures Inverse 2X. They also bought 34.9 billion KRW worth of KODEX Inverse. Conversely, they net sold 141.8 billion KRW worth of KODEX Leverage, which rises twice as much as the index increase. On the other hand, institutions net purchased 141 billion KRW worth of KODEX Leverage and sold 244.5 billion KRW worth of KODEX 200 Futures Inverse 2X.

Experts agree that rather than betting on indices, chasing purchases, or chasing rapidly rising stocks, investors should focus on sectors and companies with upward earnings revisions expected to yield higher returns.

Since the beginning of this month, only nine sectors have significantly outperformed the KOSPI returns: software, IT home appliances, machinery, energy, media & education, auto parts, IT hardware, automobiles, and construction & architecture. Conversely, the number of sectors recording returns below the market average has sharply increased to 18, the highest this year. Park Seok-hyun, head of investment strategy at KTB Investment & Securities, said, "The fact that the number of rising sectors is decreasing while the KOSPI continues to hit record highs suggests internal changes in sectoral fluctuations within the market," adding, "Among sectors with good returns, additional attention should be paid to those with foreign net purchases, as well as banks and semiconductors." Many of the nine sectors outperforming the market returns show characteristics linked to foreign net purchases. This implies that the positive returns of IT home appliances, energy, media, automobiles, and IT hardware sectors may continue.

Semiconductors and automobiles are the most promising investment sectors for the second half of the year, according to most securities firms. Han Dae-hoon, a researcher at SK Securities, said, "With expectations for export growth and the resumption of economic activities reflected, the estimated net profit of the KOSPI for Q2 has been revised upward by 26.2%, from 27.5 trillion KRW at the beginning of the year to 34.7 trillion KRW currently," adding, "Expectations for semiconductors and automobile sectors are high due to export growth." Lee Kyung-min, head of investment strategy at Daishin Securities, also emphasized, "We can expect a level-up of the KOSPI in Q3 this year (target 3630)," and forecasted, "The core will be the existing leading sectors such as internet, secondary batteries, semiconductors, and automobiles, and the movement of change has already begun."

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