Foreigners Buying Gifts... KOSPI Holding Up Well While Catching Breath Amid 'US CPI Caution'

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 10th, the KOSPI, which started off lower, is holding up well as the decline narrows. This is thanks to an improved supply-demand environment due to foreign investors switching to buying futures during the session. The market is showing a pause as investors await the release of the U.S. October Consumer Price Index (CPI).

On this day, the KOSPI opened down 18.64 points at 2405.77 (0.77%↓), marking a decline after five trading days. However, the drop has been narrowing during the session. As of 11:10 a.m., the KOSPI was at 2413.61, down 0.45% from the previous trading day. Foreign investors showed a net buying advantage of about 152 billion KRW in the futures market, which is interpreted as helping to reduce the decline. Individual investors are also buying about 37.8 billion KRW and 120.1 billion KRW in the KOSPI and KOSDAQ markets, respectively. Institutions are net buyers of 91.1 billion KRW in the KOSPI market alone. Foreign investors, however, are selling about 122.3 billion KRW in the KOSPI market.

Seo Sang-young, a researcher at Mirae Asset Securities, said, "The U.S. stock market started lower due to the burden on the domestic market from the dollar strengthening following the Republican Party's midterm election victory and volatility in the cryptocurrency market. However, considering that it is an options expiration day, changes are expected depending on foreign investors' futures trends."

Han Ji-young, a researcher at Kiwoom Securities, forecasted, "Despite favorable foreign investor supply-demand conditions in the domestic market, the U.S. midterm election uncertainties affecting major sectors such as semiconductors, big tech, and energy, along with caution over the October U.S. Consumer Price Index (CPI) (consensus 7.9%), will likely result in a weak market trend."

Currently, investors are cautious about the U.S. CPI. The expected October CPI in the U.S. market is 7.9%. Morgan Stanley, Wells Fargo, and Bank of Montreal expect 8%, Goldman Sachs and HSBC expect 7.9%, while Credit Suisse, Nomura Securities, and Bank of America expect 7.8%. If the CPI comes out high, expectations for the Federal Reserve's (Fed) pace of interest rate hikes may diminish. If inflation is not properly controlled, the Fed is more likely to adopt a hawkish stance and implement high-intensity tightening again, which would inevitably burden the stock market.

Researcher Han Ji-young added, "Although short-term market volatility may increase until the runoff election for the U.S. midterm elections in Georgia scheduled for the 6th of next month, the overall market trajectory will be dependent on existing macroeconomic events such as the CPI and Federal Open Market Committee (FOMC) announcements."

Top market capitalization stocks are mixed. In the KOSPI market, Samsung Electronics (-1.29%), LG Chem (-0.42%), Samsung SDI (-1.63%), and NAVER (-0.56%) are declining. On the other hand, LG Energy Solution (1.67%), SK Hynix (1.01%), Samsung Biologics (1.01%), and Hyundai Motor (1.47%) are on the rise.

In the KOSDAQ market, only L&F (0.67%) is rising. The strong performance of L&F’s stock is largely attributed to its announcement of better-than-expected quarterly market forecasts. Conversely, Celltrion Healthcare (-0.44%) and EcoPro BM (-1.01%) are declining.

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