Institutions 'Fall' While Individuals 'Rise' in Betting... KOSPI Tug of War

Institution Focuses on 'KOSPI Decline' and 'KOSDAQ Rise'
Individual Net Buying Leader 'KODEX Leverage'
Brokerage Firms Expect January Stock Market to Struggle to Show Strength

As the stock market has been on a downward trend since the beginning of the year, institutional investors have been focusing on purchasing inverse products that track the KOSPI index's decline. During the same period, individual investors have been the second largest buyers of KODEX Leverage, which bets on the index's rise, indicating continued expectations for the 'January effect.' Despite the domestic stock market's sluggish performance, a tense tug-of-war continues as institutional and individual investors bet on opposing index directions.

According to the Korea Exchange on the 15th, from the 2nd to the 11th, the most net-purchased stock by institutional investors was KODEX 200 Futures Inverse 2X, with a net purchase amount of 202.676 billion KRW. This product, commonly known as "Gopbeoseu," is an exchange-traded fund (ETF) that yields twice the profit when the KOSPI 200 index falls. This indicates that institutions are betting on a further decline in the KOSPI in the near term.

The next most purchased stock by institutions was Kakao. Kakao recently re-entered the 60,000 KRW range after nine months, and this price increase is thanks to strong buying by institutions. Foreign investors have also scooped up Kakao shares worth 174 billion KRW over the past month.

Notably, the product 'KODEX KOSDAQ150 Leverage,' which bets on index rises, ranked fourth among the top purchased stocks. This suggests that institutional investors expect the KOSDAQ index to rise.

EcoPro BM, which was shunned by institutions at the end of last year, also appeared on the list of top net purchases.

While institutions supported the KOSPI index's decline, individuals backed its rise. The most purchased stock by individuals at the beginning of the year was Samsung Electronics, with a net purchase of 1.3056 trillion KRW. Samsung Electronics rose to 79,600 KRW amid expectations of a recovery in semiconductor business conditions and earnings, but has since shown no signs of rebound.

During the same period, individuals were the second largest net buyers of 'KODEX Leverage,' purchasing 427 billion KRW worth. This ETF tracks twice the daily return of the KOSPI 200 index. The active betting on leverage products by individual investors appears to stem from expectations of the 'January effect,' where stock prices tend to rise early in the year.

However, the KOSPI and KOSDAQ indices, which had been rallying since the end of last year, have been in a correction phase this month. On the 12th, the KOSPI index closed down for eight consecutive trading days, marking the longest decline in one year and eight months. The KOSDAQ index closed at 868.08, down 14.45 points (-1.64%) from the previous trading day.

The decline in the indices was driven by uncertainty over interest rate cuts. After the release of the U.S. Federal Open Market Committee (FOMC) minutes on the 3rd (local time), expectations for rate cuts weakened. There is also a possibility that the timing of rate cuts could be delayed ahead of the U.S. December consumer price index (CPI) announcement. Fourth-quarter corporate earnings announcements last year are another variable that could increase market volatility.

Labor Researcher Nodonggil from Shinhan Investment Corp. said, "The expected combined operating profit for the KOSPI in the fourth quarter of last year showed a decline of about 30% from the peak, and concerns about China's economic slowdown and global IT demand have taken hold," adding, "After the U.S. consumer price announcement, market attention is likely to gradually shift to earnings."

In the securities industry, it is expected to be difficult for the stock market to show strength in January. Han Jiyoung, a researcher at Kiwoom Securities, said, "Both the Korean and U.S. stock markets have shown nine consecutive weeks of gains, leading to accumulated pressure on price levels, which is a short-term concern," and analyzed, "Although the overall market environment will be favorable throughout this year, January is expected to show a neutral price trend due to short-term level pressure and uncertainty in earnings forecasts."

Lee Kyungmin, a researcher at Daishin Securities, said, "Unless the U.S. economy worsens, expectations for the current base interest rate are proceeding to an extremely excessive level," adding, "Both scenarios are negative from the stock market perspective."

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