KOSDAQ Reaching New Highs, Will It Continue? 'Individual Investors VS Institutions and Foreigners'

Kosdaq Rise Boosts Leveraged ETFs
Individuals Bet on Decline, Institutions and Foreigners on Rise

As the KOSDAQ continues to hit new highs day after day, attention is focused on how long the upward trend will last. While institutions and foreigners expect the KOSDAQ to rise further, individual investors appear to be predicting a decline.

According to the Korea Exchange (KRX) on the 24th, recently, as the KOSDAQ has risen, leveraged exchange-traded funds (ETFs) betting on the index's increase have recorded high returns. The HANARO KOSDAQ150 Futures Leverage ETF posted a 19.26% return from the beginning of this month through the 21st. Following closely were TIGER KOSDAQ150 Leverage (19.11%), KBSTAR KOSDAQ150 Futures Leverage (19.00%), KOSEF KOSDAQ150 Futures Leverage (18.84%), and KODEX KOSDAQ150 Leverage (18.49%), all ranking within the top 10 in returns.

On the other hand, inverse ETFs betting on the index's decline recorded consecutive negative returns. ARIRANG KOSDAQ150 Futures Inverse showed the poorest performance with a -8.93% return, followed by KODEX KOSDAQ150 Futures Inverse (-8.46%), TIGER KOSDAQ150 Futures Inverse (-8.34%), KBSTAR KOSDAQ150 Futures Inverse (-8.23%), and KOSEF KOSDAQ150 Futures Inverse (-8.20%), all posting losses exceeding 8%.

As the KOSDAQ continues its strong upward momentum by hitting new highs daily, leveraged ETFs are enjoying soaring returns, while inverse ETFs are struggling. Inverse ETFs are structured to generate profits inversely proportional to the daily decline rate of the underlying index when the stock market falls, making them suitable for investors anticipating a market drop. Conversely, leveraged ETFs generate profits when the index rises.

Regarding the future trend of the KOSDAQ, forecasts differ depending on the market participants. Institutions and foreigners expect the KOSDAQ to rise further, whereas individual investors are predicting a decline. Institutions purchased 246.5 billion KRW worth of KODEX KOSDAQ150 Leverage ETFs this month, making it the second most bought stock overall. Foreigners also recorded net purchases of 8.8 billion KRW.

In contrast, individual investors sold 248.6 billion KRW worth of the same ETF, ranking it among the top net sales. The KODEX KOSDAQ150 Futures Inverse ETF showed a different pattern. During the same period, institutions net sold 469.5 billion KRW of KODEX KOSDAQ150 Futures Inverse ETFs. Foreigners also sold 12.8 billion KRW. Individual investors bought 474.3 billion KRW, showing a bet on the index's decline.

Recent KOSDAQ rallies are analyzed to be driven by a recovery in investor sentiment ahead of the economy. Yujun Choi, a researcher at Shinhan Investment Corp., explained, "While the KOSPI has been sluggish, the KOSDAQ has hit 52-week highs. The recent rally stems from a recovery in investor sentiment that outpaced the slow recovery in manufacturing conditions, including in China, and from movements seeking alternative investments."

However, since the recent KOSDAQ rally is concentrated in a small number of stocks, it is expected to be difficult for the rally to continue for a long time. Researcher Choi said, "The KOSDAQ's upward trend is coming from a few stocks, and excluding the top five contributors to the recent rise, the index is actually declining. Stocks that rose quickly also tend to have high volatility on the downside, so it is hard to say the recent KOSDAQ rally is of high quality."

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