[Closing Market] KOSPI Rebounds Above 5,600 After Seven-Day Slide

On the afternoon of Oct. 16, the KOSPI and KOSDAQ indices are displayed on the electronic board at the dealing room of Hana Bank headquarters in Jung-gu, Seoul. (Yonhap) After the unprecedented crash that shook the domestic stock market the previous day, the domestic stock market succeeded in a dramatic rebound on Friday, Oct. 16, as strong bargain hunting flowed in. The domestic stock market, which had plummeted more than 7% with circuit breakers activated in both the KOSPI Market and KOSDAQ Market the previous day, showed a steep recovery on this day, driven by the shift to buying by institutions and foreigners. According to the Korea Exchange on this day, the KOSPI index, which opened at 5653.99, up 99.77 points (1.80%) from the previous close, finished trading at 5668.05, up 113.83 points (2.05%) compared to the previous trading day. The index slid to 5590.33 in early trading but later expanded its gains, rising to 5809.94 during the session. However, it gave back some of its gains in the afternoon and closed at the 5660 level. On this day, the KOSDAQ index also recorded 794.78, surging 33.96 points (4.46%), rapidly recovering investor sentiment. On this day, the index opened higher at 772.17 and went down to 764.97 during the session, but later expanded its gains and climbed to 807.54. Foreign Investors Clear Net Selling Stance Foreign investors, who had collapsed the index by pouring out a record sell-off volume reaching 3.64 trillion won (about $2.73 billion) on the previous day, cleared their net selling stance and returned to buying after a long time on this day. On this day, foreigners drove the index rebound by showing a net buying trend in the KOSPI Market, centered on blue-chip stocks whose low-price merit was highlighted. Individuals and institutions, who had engaged in a defensive battle by solely absorbing a massive volume reaching 2.98 trillion won on the previous day, also coordinated their trading on this day in line with the momentum of each sector amid the supply and demand battle. Institutions also strongly supported the upper end of the index by introducing a massive influx of bargain hunting centered on the electrical and electronic sectors and large-cap stocks. The market, which had fallen into a panic the previous day, succeeded in largely resolving the anxiety caused by the short-term plunge as the foreign selling trend calmed down and an influx of buying equivalent to a joint net buying by institutions and foreigners appeared. Specifically, foreigners net bought 341 billion won, while individuals and institutions net sold 484.6 billion won and 683.3 billion won, respectively. In the KOSDAQ Market, institutions net bought 167.5 billion won, while individuals and foreigners net sold 90.5 billion won and 92.9 billion won, respectively. Top Two Semiconductor Stocks Simultaneously Turn to a Rebound The top two semiconductor stocks, which had delivered a great shock to investors by recording plunges of more than 9% and 11%, respectively, two days prior, simultaneously turned to a rebound on this day along with the perception that they had passed the oversold section. Most of the top market capitalization stocks rose. Samsung Electronics succeeded in a rebound, closing around the 215,500 won level, up 2.62% compared to the previous trading day. It had plummeted to the 210,000 won level the previous day as third-quarter earnings expectations and ‘sell-on’ volumes overlapped, but it recovered the mid-210,000 won level again on this day as bargain hunting flowed in. SK hynix finished trading at the 1,272,000 won level, up 0.79%, showing a strong flat trend compared to the previous trading day. It struggled as it was pushed down to 1,262,000 won on the previous day, but it closed with a slight upward trend on this day as defensive buying flowed in due to the perception of an excessive drop. Leading KOSDAQ stocks, which had plunged together the previous day along with top KOSPI market capitalization large-cap stocks, including secondary batteries, biopharmaceuticals, and internet sectors, significantly expanded the index’s upward margin driven by the 4.46% surge in the KOSDAQ Market. In particular, across the KOSDAQ, strong momentum of more than 4% was received as individual and institutional buying concentrated around pharmaceutical and biopharmaceutical as well as materials, parts, and equipment stocks that had experienced excessive drops. Samsung Electronics Preference Shares (5.09%), SK Square (2.48%), Samsung Electro-Mechanics (2.15%), Hyundai Motor (5.58%), Samsung Biologics (4.09%), Samsung Life Insurance (4.61%), KB Financial Group (2.11%), and LG Energy Solution (0.12%) also rose. Top KOSDAQ market capitalization stocks also rose simultaneously. Alteogen (9.60%), Ecopro (0.62%), Ecopro BM (0.94%), Jusung Engineering (2.93%), Rainbow Robotics (2.03%), Wonik IPS (6.13%), EO Technics (5.91%), Leeno Industrial (5.36%), and Simmtech (1.93%) closed higher. Won/Dollar Exchange Rate Closes at 1331.4 Won, Down 13.2 Won from the Previous Day Amid the stock market showing a sharp rebound trend, the foreign exchange market also appears to be finding stability after going through extreme volatility. The won-dollar exchange rate escaped the pressure of the previous day’s surge and showed a slight decline or stable trend, alleviating concerns over additional outflow of foreign funds. With the global dollar index taking a breather and a sense of caution over fine-tuning by foreign exchange authorities coming into play, the exchange rate stopped its additional surge and repeatedly fluctuated around the 1,340 won level. In the Seoul Foreign Exchange Market on this day, the won-dollar exchange rate closed at 1331.4 won, down 13.2 won from the previous day. The exchange rate began trading at 1340.0 won, which was 4.6 won lower, exceeded 1345 won, and then fell back to the 1330 won range. This is interpreted as being due to the continued dollar selling by domestic export companies despite the financial market instability. Experts assess that the rebound seen in the latter half of this week has the nature of a simple technical reflex buying trend, while simultaneously being a phase that washes away the fatigue caused by the short-term plunge. However, as macroeconomic turning points such as the Monetary Policy Board of the Bank of Korea on Oct. 22 and the U.S. FOMC scheduled for the end of October are approaching, this is a time that requires a cautious investment strategy that closely monitors the trends of external economic indicators rather than unreasonable leverage investments.