Foreigners Turn to Buying While Individuals Hurry to Sell... KOSPI Fails to Recover 2500 "Not a Relief Rally"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 16th, after the domestic stock market started on an upward trend, the KOSPI maintained a rise of over 1%, and the KOSDAQ maintained a rise of over 2%. However, the KOSPI failed to settle above the 2500 mark, showing insufficient strength for a significant rebound. The KOSDAQ is also hovering below the 820 level.

At 1:33 PM on the same day, the KOSPI was up 1.29% at 2478.83, and the KOSDAQ was up 2.15% at 8166.82. The New York stock market rallied in relief, interpreting the unprecedented interest rate hike in 28 years as a factor that could curb inflation, and the domestic stock market also took this as an opportunity for market stabilization.

At the June Federal Open Market Committee (FOMC) regular meeting held on the 15th (local time), a 0.75 percentage point (75bp, 1bp=0.01%) increase in the benchmark interest rate was decided. It was the first time in 28 years since 1994 that the Federal Reserve (Fed) took a giant step. This move was interpreted as a decisive action following the release of the US May Consumer Price Index (CPI) last week, which came out higher than market expectations. As a result, the US benchmark interest rate rose from the 0.75~1% range to the 1.5~1.75% range. The market was relieved, expecting that this strong measure would help stabilize prices by curbing inflation, which hinders economic growth. Moreover, Fed Chair Jerome Powell's expression of confidence in the economy also injected positive sentiment into the market.

Lee Kyung-min, head of the investment strategy team at Daishin Securities, explained, "With the resolution of uncertainty over the overnight rate hike and Chair Powell's determination to control inflation combined with confidence in the economy, the financial market showed a turnaround," adding, "It is expected that investor anxiety, which had anticipated the Fed's stance and current fundamental conditions ahead of time, will calm down following the June FOMC." Accordingly, Lee analyzed that a rebound process following the recent sharp decline will unfold based on the 2400 level.

As the domestic stock market succeeded in rebounding, individual investors have stopped their 'buying' streak and are showing a selling preference. At this time, net selling is occurring in both the KOSPI and KOSDAQ markets, with approximately 69.1 billion KRW and 125 billion KRW, respectively. Foreigners and institutions are showing a buying preference together for the first time in a while. Foreigners are net buying about 38.1 billion KRW and 68.5 billion KRW in the two markets, respectively. Institutions are also purchasing about 22 billion KRW and 55.6 billion KRW, respectively.

Most of the top market capitalization stocks are in the red. In particular, Samsung Electronics has escaped the '50,000 won electronics' crisis and is showing a rise of over 1%. Shinhan Financial Investment said, "In the short term, the decline in valuation due to the rise in market discount rates is uncomfortable, but this has been largely reflected," and added, "Considering that macro uncertainties have been pre-reflected and that this is an extremely supply-constrained phase, Samsung Electronics' stock price is expected to enter a phase where it outperforms the KOSPI."

Although the market is attempting a rebound, experts view that it is still too unstable to hold a relief rally. Han Ji-young, a researcher at Kiwoom Securities, said, "The domestic stock market, which hit a new yearly low due to a sell-off in the previous trading day, rebounded today thanks to the fading impact of the Fed's June giant step and the sharp drop in the won/dollar exchange rate (currently down more than 10 won offshore)," adding, "However, the direction of oil prices, which most significantly affect future expected inflation, has become important, and the market must digest the June consumer price data scheduled for July (expected to confirm a peak-out) and the July FOMC event (expected 75bp hike) before a full-fledged relief rally can unfold."

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