After the 'Yeonhyu' Holiday, KOSPI Soars Close to 2450... Foreigners Bet on Rebound vs. Individuals Invest 1 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] After the 'Chuseok holiday' ended, the KOSPI, which opened on the 13th, recorded a refreshing rise of over 2%. Influenced by the rally in global stock markets including the U.S. stock market during the holiday period and improved investor sentiment due to the inflation peak theory, it quickly soared to just below the 2450 level. On that day, the KOSPI closed at 2449.54, up 65.26 points (2.74%) from the previous trading day. It started at 2418.59, up 34.31 points (1.44%), quickly recovering the 2420 and 2430 levels shortly after opening, and by around noon, it even rose to the 2440 level. In the afternoon, it maintained a rise of over 2% and even eyed breaking through 2450.

The KOSPI's rise was led by net buying from both foreigners and institutions. Foreigners and institutions bought approximately 400.3 billion KRW and 715.3 billion KRW respectively in the KOSPI market. It was the first time in seven trading days that foreigners switched to a buying advantage. The high-flying won-dollar exchange rate somewhat stabilized, positively affecting foreign demand. In particular, foreigners net bought 1.1573 trillion KRW worth in the KOSPI 200 futures market alone, marking the largest scale since July last year. On the other hand, individuals sold off 1.1029 trillion KRW worth, seeking to realize profits.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Both the KOSPI and KOSDAQ closed higher, showing synchronization with the U.S. stock market rebound during the Chuseok holiday," adding, "The won-dollar exchange rate also fell below 1380 won, expanding foreign net buying inflows and driving a strong rise of over 2%." Lee Jin-woo, a researcher at Meritz Securities, also explained, "Looking at the reasons why the U.S. stock market rose during the holiday, expectations for inflation indicators were pre-reflected, providing justification for the market rebound," and "The dollar also showed stability, and these factors combined to cause large-scale net buying in the futures market."

Overnight, the New York stock market showed strength across the board as expectations grew for a slowdown in the U.S. August Consumer Price Index (CPI), which acted as a factor improving investor sentiment. The Dow Jones Industrial Average closed at 32,381.34, up 0.71% from the previous trading day. The large-cap focused Standard & Poor's (S&P) 500 index rose 0.06% to 4,110.41. The tech-heavy Nasdaq index closed at 12,266.41, up 1.27%. Thus, the three major indices rose for four consecutive trading days.

Regarding the U.S. August CPI, which was announced that evening in Korean time, the market predicted an 8.0% increase year-on-year and a 0.1% decrease month-on-month. During the Chuseok holiday, the European Central Bank (ECB) raised interest rates by 75 basis points, and the dollar index also showed signs of stabilization, which acted as a factor for foreign capital inflow.

On that day, the leading stocks also stood out in the stock market. KOSPI's leading stock Samsung Electronics rose by a whopping 2,500 KRW (4.50%) to close at 58,100 KRW. SK Hynix also rose 4.87%. This was interpreted as a reflection of expectations for benefits due to the Philadelphia Semiconductor Index rising for four consecutive trading days and news that the U.S. government plans to expand semiconductor equipment export restrictions to China next month.

Meanwhile, the KOSDAQ closed up 2.44% at 796.79. The index started at 790.89, up 13.08 points (1.68%) from the previous trading day. In the KOSDAQ market, foreigners and institutions net bought 108.9 billion KRW and 227.7 billion KRW respectively, while individuals net sold 319.4 billion KRW. Among the top market capitalization stocks, Kakao Games and Pearl Abyss showed rises of over 5% and 4%, respectively.

Market experts see the August CPI, to be released that night (local time on the 13th), as decisive for whether the KOSPI's rebound will continue.

Lee Kyung-min, a researcher at Daishin Securities, said, "Whether the rebound will gain momentum or end early depends on the results of the U.S. August CPI released tonight," adding, "If inflation is confirmed to be lower than expected, bond yields will reverse downward, supporting rebounds in oversold stocks and growth stocks."

Chae Hyun-gi, a researcher at Cape Investment & Securities, said, "Given that global stock markets showed good returns during the Chuseok holiday, the domestic stock market may show an upward trend this week, but there are some volatility factors such as the Federal Open Market Committee (FOMC), making it difficult to predict a trend direction," adding, "Depending on the indicator results, both upward and downward movements in the stock market are possible." He continued, "At this point, the condition for the stock market to rebound is whether the Fed's tightening stance in 2023 will ease due to rapid inflation calming," emphasizing, "Among the CPI data, the core inflation index is expected to be very meaningful in predicting the future direction of the stock market."

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