[Closing Market] KOSPI Rebounds Above 5,760 After 3% Early Plunge

The KOSPI, and KOSDAQ indices are displayed on an electronic board at the dealing room of Hana Bank headquarters in Jung-gu, Seoul, on the afternoon of Oct. 19. (Yonhap) On Oct. 9, the domestic stock market overcame a sharp early shock and successfully staged a dramatic ‘V-shaped rebound’ with a strong influx of low-priced buying, closing on a strong note. Although a rollercoaster-like market unfolded, oscillating between hell and heaven in the aftermath of increased volatility in global stock markets over the weekend and the emergence of profit-taking sales, the index proved its solid resilience thanks to massive buying by institutional investors and a reduction in the selling breadth of foreigners. According to the Korea Exchange on this day, the KOSPI index finished trading at 5,768.01, up 99.96 points (1.76%) from the previous trading day, successfully settling into the 5,700 level. In early trading, global risk aversion sentiment peaked, and the KOSPI showed an unstable start, plummeting more than 3% at one point, but quickly recovered its intraday losses and drew an upward curve into the afternoon. The KOSDAQ index also rode a companion upward trend, closing at 808.89, up 14.11 points (1.78%) from the previous trading day, recapturing the 800-point height. This is the first recapture of the 800 level in three trading days since September 14. The index started at 773.06, down 21.72 points (2.73%), and fluctuated repeatedly, but like the KOSPI, it turned upward during the session. Active Buying by Institutions Amid Individual Selling Bomb The number one contributor to the stock market rebound on this day was undoubtedly institutional investors. This was a stark contrast to retail investors, who panicked early in the session and poured out massive profit-taking and stop-loss volumes. Institutional investors strongly supported the lower end of the stock market by recording a net buying trend of approximately 577 billion won (about $433.7 million). Low-priced buying funds flowed in aggressively, centered on pension funds, financial investments, and investment trusts. Foreign investors engaged in a trading battle centered on some sectors during the process of recovering intraday losses and turned back to net selling after just one trading day, but the scale was limited to 36 billion won, significantly easing the selling intensity compared to previous trading days and contributing to market stability. In particular, when including Nextrade, foreigners net bought more than 600 billion won. As the index showed a sharp decline early in the session, individual investors concentrated on dumping volumes driven by fear and profit-taking sales, showing a selling dominance of 1.088 trillion won and pouring out a massive amount of supply. A similar supply and demand pattern unfolded in the KOSDAQ market. While individuals released supply, the influx of some institutional and foreign supply allowed the index to shake off all intraday losses and show the underlying strength to rebound and close up more than 1.7%. Foreigners net sold 143.7 billion won, while individuals net bought 64 billion won and institutions net bought 67 billion won. Top Two Semiconductor Stocks Close Higher on Afternoon Buying The top two semiconductor stocks, which are domestic bellwethers, were exposed to fierce selling pressure early in the session and recorded weakness, but as buying concentrated in the afternoon, they successfully turned on red lights (rose) side by side and closed. Samsung Electronics overcame its early sluggishness and succeeded in a rebound, finishing trading at 218,000 won, up 1.16% from the previous trading day. The influx of institutional and low-priced buying drove the stock price increase. SK hynix showed a solid trend based on robust confidence in AI semiconductor demand, recording 1,277,000 won, up 0.39%, continuing its upward trend. Top-tier large-cap stocks in the KOSPI market capitalization, such as IT, materials, parts, and equipment (Soboojang), automobiles, and secondary batteries, also recovered most of their early plunges and turned upward, adding strength to the index’s settlement at the 5,700 level. SK Square (-0.51%), Samsung Electro-Mechanics (-1.52%), and Samsung C&T (-0.52%) fell, but Hyundai Motor (4.49%), Samsung Biologics (9.94%), KB Financial Group (1.69%), and Samsung Life Insurance (2.52%) successfully changed direction to an upward trend after starting lower. In particular, as expectations for expanded demand for energy storage systems (ESS) originating from North America received attention, secondary battery-related stocks such as Samsung SDI (11.70), LG Energy Solution (+7.20%), POSCO Future M, LG Chem (+8.46%), and L&F (+7.26%) rose significantly. In the KOSDAQ market as well, core secondary battery stocks such as EcoPro BM and EcoPro, along with major bio stocks like Alteogen, recorded a simultaneous rebound in step with the KOSDAQ index’s 1.78% companion rise. They completely reversed the drop that plummeted more than 4% at one point in the morning, showing a rapid calming of investor sentiment. In particular, EcoPro (11.19%) and EcoPro BM (8.33%) rose noticeably. Rainbow Robotics (7.23%) also climbed significantly, and pharmaceutical/bio stocks Alteogen (2.14%) and HLB (3.00%) also closed on an upward trend. Won/Dollar Exchange Rate Finds Stability with Slight Decline In conjunction with the ‘V-shaped rebound’ in the stock market, the won/dollar exchange rate in the Seoul foreign exchange market also received downward pressure and showed signs of calming down. On Oct. 19, the won/dollar exchange rate in the Seoul foreign exchange market closed at 1,330.3 won, down 1.1 won from the previous trading day. In early trading, it faced upward pressure in the aftermath of global strong dollar pressure and stock market instability, but as the domestic stock market digested the foreign selling offensive and dollar selling volumes emerged in the foreign exchange market, the exchange rate returned to the low 1,330 won range. Experts diagnose that while it is positive that the stock market defended the 5,700 level with the solid defensive power of institutions despite the short-term volatility of foreign futures and spot supply and demand, there is a need for selective stock picking and risk management to continue for the time being ahead of upcoming global macro indicator announcements and the earnings season of major tech companies.