As the Stock Market Opens for the New Year... Retail Investors "Bet on a Decline"

Foreigners and Institutions Focus on Rise
"Foreigners Unlikely to Show Noticeable Selling Pressure"

[Asia Economy Reporter Gong Byung-sun] As the first trading day of the new year opened, individual investors bet on a decline in the domestic stock market. This is interpreted as focusing on the possibility of a correction caused by the acceleration of the U.S. Federal Reserve's (Fed) tapering of asset purchases in the future. However, the early-year stock market is moving in a direction that individual investors do not want.

According to the Korea Exchange on the 4th, the ETF with the highest trading volume among domestic listed ETFs the previous day was 'KODEX Leverage,' recording a total of 362 billion KRW. KODEX Leverage is an ETF that tracks twice the daily return of the KOSPI 200 index and is purchased when an increase is expected. The previous day, foreigners and institutions net bought KODEX Leverage by 7.9 billion KRW and 11.7 billion KRW respectively, while individual investors net sold 18.9 billion KRW.

On the other hand, the second highest trading volume (251.7 billion KRW) was recorded by 'KODEX 200 Futures Inverse 2X,' which was mainly bought by individual investors. KODEX 200 Futures Inverse 2X is a so-called 'double inverse' ETF that gains 2% when the KOSPI 200 futures index falls by 1% and loses 2% when it rises by 1%. The previous day, individual investors net bought 17.2 billion KRW of KODEX 200 Futures Inverse 2X, while foreigners and institutions net sold 11.5 billion KRW and 6 billion KRW respectively. Although not as much as the double inverse, 'KODEX Inverse,' which inversely tracks the KOSPI 200 index, was also bought by individuals for 1.1 billion KRW while foreigners and institutions sold 600 million KRW and 400 million KRW respectively.

Individual investors thus placed more weight on the domestic stock market's sluggishness. However, the market situation is moving contrary to individual investors' expectations. The previous day, the KOSPI and KOSDAQ rose by 0.37% and 0.60% respectively. The U.S. stock market, which greatly influences the domestic market, also closed higher on the first day of the new year. On the 3rd (local time) at the New York Stock Exchange, the Dow Jones Industrial Average, S&P 500, and tech-heavy Nasdaq rose by 0.68%, 0.64%, and 1.20% respectively to close the session.

Foreigners, who hold the key to supply and demand, also seem to be leaning towards the upside. Last month, foreigners net bought 2.8412 trillion KRW in the domestic stock market. Hwang Se-woon, a researcher at the Korea Capital Market Institute, said, "Foreigners have a significant impact on the flow of the domestic stock market," and predicted, "Foreigners will not show a noticeable selling trend going forward."

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