'Pajukjise' KOSPI 'Approaches 2440'... Foreigners Return as Individuals 'Realize Profits'

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] The KOSPI index is showing strength with its first 2% range increase since June 24. After soaring quickly to 2420 and 2430 right after the opening, it is now hovering around 2440. The rally in the U.S. New York stock market as well as global markets, combined with dual buying by foreigners and institutions, is supporting the index's rise. As foreigners return, individual investors are realizing profits.

At 11:02 a.m. on the 13th, the KOSPI index recorded 2439.37, up 2.30% from the previous trading day. The KOSPI opened at 2418.59, up 34.31 points (1.44%).

Foreigners and institutions are buying approximately 144.6 billion KRW and 435 billion KRW respectively in the KOSPI market. It is the first time in seven trading days that foreigners have switched to a net buying position. The high-flying won-dollar exchange rate has somewhat stabilized, positively affecting foreign demand. Meanwhile, individuals are realizing profits for the first time in four trading days, selling about 569.8 billion KRW.

Seo Sang-young, a researcher at Mirae Asset Securities, said, "Despite hawkish remarks from Federal Reserve (Fed) officials during the Chuseok holiday period, the U.S. stock market continued its upward trend as the dollar weakened, which positively influenced the Korean stock market." He added, "Furthermore, ahead of the U.S. Consumer Price Index (CPI) announcement this evening Korean time, the significant downward revision of expected inflation, along with the stabilization of global commodity prices and easing supply chain concerns, has expanded expectations for inflation stabilization, which is also favorable."

Han Ji-young, a researcher at Kiwoom Securities, said, "Since the CPI consensus is formed at 8.1% (YoY), it is reasonable to view that U.S. inflation has shifted to a downward trend." She added, "The Fed has also declared that it will make rate decisions based on data before each Federal Open Market Committee (FOMC) meeting, so if the actual figures confirm inflation slowdown, there is an expectation that after the 75 basis points hike at the September FOMC, the pace of tightening will be adjusted in subsequent meetings, allowing the stock market to have an additional relief rally."

Overnight, all three major New York stock indices rose. The Dow Jones Industrial Average closed at 32,381.34, up 229.63 points (0.71%) from the previous session. The Standard & Poor’s (S&P) 500 index closed at 4,110.41, up 43.05 points (1.06%). The tech-heavy Nasdaq index ended at 12,266.41, up 154.10 points (1.27%). The market was influenced by opinions that inflation had peaked ahead of the CPI announcement. The expectation that price increases will slow down after the peak led to the rise in stock prices.

Among the top market capitalization stocks, the leading stock Samsung Electronics rose 2,100 KRW (3.78%) to recover to 57,700 KRW. SK Hynix also rose 3.43% to 93,500 KRW. Given that the Philadelphia Semiconductor Index has risen for four consecutive trading days since the 7th, this is interpreted as a rebound.

However, there are opinions that it is necessary to watch whether the KOSPI will continue its upward trend. Chae Hyun-gi, a researcher at Cape Investment & Securities, said, "Given that global stock markets showed good returns during the Chuseok holiday, the domestic market may show an upward trend this week, but there are some volatility factors such as the FOMC that make it difficult to predict the trend direction." He added, "Depending on the results of indicators, both upward and downward movements in the stock market are possible." He emphasized, "At this point, the condition for the market to rebound is whether the Fed’s tightening stance in 2023 will ease due to rapid inflation stabilization. Among the CPI data, the core CPI is expected to be very significant in predicting the future market direction."

The researcher also advised, "Due to CPI-related caution, the overall index ceiling may be limited to the 2% range, which could be disappointing for domestic investors." He recommended, "Until the September FOMC, it is appropriate to maintain the current stock allocation rather than actively increasing it, and to prepare proactively."

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