KOSPI Supported by Fed's Pace Adjustment Theory...Individual Investors Sell Early Amid Rise

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 27th, the KOSPI index, which started higher, extended its gains from the beginning of the session and recovered to the 2270 level. Although the Nasdaq index in the U.S. New York stock market plunged due to disappointing earnings of major big-tech companies, it has not significantly affected investor sentiment in the domestic market. Rather, it seems that the easing concerns over the Federal Reserve's (Fed) tightening have been perceived as a positive factor, alleviating the burden. Individual investors have been offloading shares since the early session, taking advantage of the rise.

Although the New York stock market ended its rally due to disappointing earnings and outlooks from big-tech companies, it did not have much impact on the domestic market. On the 26th (local time), the Dow Jones Industrial Average closed at 31,839.11, up 2.37 points (0.01%) from the previous session. The Dow index rose more than 300 points during the session but gave up most of the gains near the end, finishing flat. The Standard & Poor's (S&P) 500 index closed down 28.51 points (0.74%) at 3,830.60, and the tech-heavy Nasdaq index plunged 228.12 points (2.04%) to close at 10,970.99.

Seosangyoung, a researcher at Mirae Asset Securities, noted, "The U.S. stock market declined mainly due to selling pressure from the slowdown in earnings of large tech stocks, centered on the Nasdaq, which is a burden for the Korean stock market. However, since much of this was already reflected the previous day, the impact is expected to be limited."

Foreign and institutional demand is also favorable for the domestic market. Foreign investors are net buyers of 47.3 billion KRW and 9.4 billion KRW in the KOSPI and KOSDAQ markets, respectively. Institutions have purchased about 156.7 billion KRW in the KOSPI market. On the other hand, they have recorded a slight net sale of 3.7 billion KRW in the KOSDAQ market. Only individual investors are net sellers, offloading 201.2 billion KRW and 6.9 billion KRW in the two markets, respectively.

Researcher Seo said, "With the expansion of the dollar's weakness, the won's strength may increase, which is expected to have a positive effect on foreign demand," adding, "The Korean stock market is expected to start higher and then focus on the movements of the Chinese stock market."

Han Ji-young, a researcher at Kiwoom Securities, forecasted, "With mixed factors such as global dollar weakness and expectations for the Fed's pace adjustment as upward factors, and concerns over U.S. big-tech earnings as downward factors, the market will show sectoral differentiation depending on individual issues."

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