[MarketING] Rotational Market Amidst Cautious Sentiment

KOSPI Closes Higher for 5 Consecutive Days
Powell's Remarks Limit Gains Amid Cautious Sentiment
Distinct Sector Divergence Evident

The KOSPI continued its five-day winning streak but showed limited gains due to cautious sentiment. Ahead of Federal Reserve (Fed) Chair Jerome Powell's congressional testimony, the market remained cautious, with differentiated performance across individual stocks.

KOSPI Rises for 5 Consecutive Days

On the 7th, the KOSPI closed at 2,463.35, up 0.73 points (0.03%) from the previous day. The KOSDAQ ended the session down 0.75 points (0.09%) at 815.76.

The KOSPI, which started lower, managed to turn positive but failed to extend its gains amid growing caution. The KOSDAQ, which had recently surged sharply, closed slightly lower, taking a breather. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The domestic stock market started lower, but the KOSPI turned positive due to strength in secondary battery stocks, while the KOSDAQ showed weakness due to selling pressure from institutions and foreigners," adding, "The market's cautious stance ahead of Chair Powell's congressional speech limited the index's rise."

Secondary battery stocks again stood out with strength, but the pattern differed from the previous day. EcoPro BM, L&F, and EcoPro, which had driven the recent KOSDAQ rally, each fell more than 5% due to profit-taking, pulling the KOSDAQ index down. In contrast, POSCO Chemical surged 11.09%, LG Energy Solution rose 3.47%, Samsung SDI gained 1.54%, and LG Chem increased 1.93%, with these large secondary battery stocks leading the KOSPI's rise. Researcher Kim explained, "Expectations of benefits from the joint factory establishment between Samsung SDI and GM continued, causing a sharp rise in non-metallic mineral sectors like POSCO Chemical on the KOSPI," adding, "However, in the KOSDAQ secondary battery sector, profit-taking emerged due to recent overheating, showing a cautious pattern."

With the continued strength of secondary battery stocks this year, interest in future investment strategies is growing. Jang Jeong-hoon, a researcher at Samsung Securities, said, "Since confirming POSCO Chemical's large-scale long-term contract with Samsung SDI at the end of January, in February, L&F signed a 3.8 trillion KRW contract with Tesla over two years, sparking large-scale order expectations centered on cathode materials. Despite a sharper-than-expected decline in metal prices affecting these material stocks' earnings, optimism about stock prices has expanded," adding, "In a situation where the positive factor of expanding orders and the negative factor of falling metal prices are in conflict, if concerns about front-end demand are eased, a positive investment environment could continue." He added, "However, due to sensitivity to event timing and scale, stock price volatility is expected to increase in March."

SM Entertainment Surges Amid Management Dispute

The share competition between HYBE and Kakao over SM Entertainment intensified, leading to differentiated stock performances among SM Entertainment, HYBE, and Kakao.

Amid the management dispute, SM Entertainment's stock surged 15.07% on the day, marking five consecutive days of gains. The price jumped after Kakao announced a tender offer to acquire 35% of SM Entertainment's issued shares. Kakao disclosed that, together with Kakao Entertainment, it would conduct a tender offer from the day through the 26th to purchase 35% of SM shares at 150,000 KRW per share. Kakao and Kakao Entertainment had also purchased large amounts of SM shares on the market on the 28th of last month, the closing date of HYBE's tender offer. Even after HYBE's tender offer ended, Kakao continued buying shares on the market, acquiring 68,505 shares on the 2nd and 44,554 shares on the 3rd. As a result, Kakao holds 3.28% (780,000 shares) of SM, and Kakao Entertainment holds 1.63% (387,400 shares). Combined, their stake amounts to 4.91%, and if the tender offer succeeds, Kakao's stake is expected to reach 40%.

While SM surged, the stocks of Kakao and HYBE, which are competing for shares, showed weakness. Kakao fell 3.30% amid concerns over the heavy financial burden of the acquisition, and HYBE, which appears to face difficulties in acquiring SM, dropped 1.72%.

Previously, HYBE only managed to secure an additional 0.98% stake through its tender offer for SM conducted from the 10th of last month to the 1st of this month. Adding the 14.8% stake sold to HYBE by former chief producer Lee Soo-man, HYBE currently holds 15.78% of SM shares.

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