[Closing Market] KOSPI Surges 3.3%, Reclaiming 5,700 As Foreign Buyers Return

On Oct. 21, the KOSPI and other indices are displayed on the dealing room board at the headquarters of Hana Bank in Jung-gu, Seoul. The KOSPI closed regular trading that day with a sharp gain of over 3%, ending at 5,735.66, up 182.92 points (3.29%) from the previous session. [Yonhap] The domestic stock market, which had been unable to escape the shock of a massive crash the previous day, successfully mounted a dramatic rebound in the 3% range in just one day, riding on the back of aggressive low-priced buying and a favorable global semiconductor tailwind. On Oct. 21, the KOSPI index closed at 5,735.66, surging 182.92 points (3.29%) from the previous trading day, rapidly reclaiming the 5,700 mark. On this day, the KOSPI showcased strong upward momentum, soaring to the 5,816 level at one point during intraday trading, and a vibrant energy circulated throughout the broader market as the 25th buy sidecar of the year was triggered by the surging index. This marks a dramatic reversal compared to the previous day when the index collapsed by 3.73% under an indiscriminate dumping offensive by foreign and institutional investors. The sharp drop in international oil prices and the downward stabilization of United States Treasury yields in the New York stock market overnight served as a catalyst for improving investor sentiment. Furthermore, as expectations for the earnings of major big tech companies and news of massive Nvidia AI semiconductor orders from Greater China-based enterprises were reported, the perception that demand for computational semiconductors remains robust widely spread. In addition, the strong influx of technical rebound buying amid fatigue from the short-term crash acted as a primary driving force propelling the index upward. The KOSDAQ market also overcame the shock of the previous day’s steep decline and joined the rebound rally. The KOSDAQ index finished the session at 792.76, up 10.79 points (1.38%) from the previous session. The KOSDAQ briefly exceeded the 800 mark in early trading, but it surrendered some of its gains as funds concentrated heavily on large-cap KOSPI stocks. Foreign Investors Play the Vanguard Role in the Index Rebound by Actively Participating in Low-priced Buying Looking at the supply and demand trends by investor type, foreign investors, who had fled in droves while leading the market decline the previous day, stood at the vanguard of the index rebound on this day by actively participating in low-priced buying. In the securities market, foreigners net-bought 664.6 billion won (about $501.51 million), driving the index’s ascent. On the other hand, retail investors, who had recently stepped up to defend the index, capitalized on the rebound to unload profit-taking volumes, recording a net selling dominance of 1.1308 trillion won. Institutional investors also exhibited a selling dominance, primarily led by financial investments, net-selling 72.2 billion won worth of shares, but the influx of program buying in early trading provided rock-solid support at the bottom. In the KOSDAQ market, foreigners net-sold 172 billion won. Retail and institutional investors net-bought 52 billion won and 105 billion won, respectively. Top-tier Stocks, Including Samsung Electronics and SK hynix, Erect ‘Pillars of Fire’ and Stage a Synchronized Steep Rally The core top-tier stocks by market capitalization on the KOSPI quite literally erected ‘pillars of fire,’ staging a synchronized steep rally. Samsung Electronics and SK hynix, the twin pillars of the domestic semiconductor industry, completely washed away the previous day’s sluggishness and launched a steep upward rally hovering around 5% to 6%. Samsung Electronics solidified its landing in the 200,000 won range by recording a formidable gain in the 5% range, while SK hynix also skyrocketed over 6%, instantly recovering the price levels that had sparked fears of a collapse the day before. This is the result of funds concentrating heavily on large-cap semiconductor stocks as the persistent demand for global AI infrastructure investment was highlighted. Specifically, Samsung Electronics, which had plummeted more than 3% the previous day, closed at 223,500 won, up 5.67%, and SK hynix finished at 1,294,000 won, leaping 5.81%, as the top two semiconductor giants spearheaded the index rebound. Other KOSPI large-cap stocks also evenly lit up blue lights, yet they displayed mixed trends across individual stocks. Samsung Biologics and Celltrion, the leading bio stocks, also closed higher amid a stable supply and demand flow. By sector, however, a differentiated market unfolded; while IT growth stocks such as semiconductors robustly dragged the index upward, representative automobile stocks, leading secondary battery stocks LG Energy Solution and Samsung SDI, as well as some financial stocks and the credit card and banking sectors, exhibited relative weakness. SK Group stocks, including SK Square (+5.13%) and SK Inc. (+12.62%), rose in unison. Samsung Life Insurance (+3.38%) and Samsung C&T (+5.45%) closed higher, but LG Energy Solution (-0.60%) and Hyundai Motor (-0.16%) experienced minor declines. Top-tier KOSDAQ market capitalization stocks, including core secondary battery material stocks like EcoPro BM and EcoPro, alongside pharmaceutical and bio stocks such as Alteogen, and robot-related materials, parts, and equipment stocks like Rainbow Robotics, all successfully rebounded in unison, solidly reinforcing the index’s downward rigidity. Among the top market capitalization stocks, HLB (-1.51%) and Leeno Industrial (-0.15%) fell slightly, but a significant number showed an upward trend in the 3% range. Elice, an AI data center and Neo Cloud-related stock that drew market attention by making its debut on the KOSDAQ with a 32% crash the previous day, closed at the upper limit price. Won/Dollar Exchange Rate Closes at 1,325.2 Won, Down 2.9 Won from the Previous Day… Recording the Lowest Level in About Two Years In the foreign exchange market, the won/dollar exchange rate further intensified its downward pressure, sinking near its lowest point of the year. On Oct. 21 in the Seoul foreign exchange market, the won/dollar exchange rate closed at 1,325.2 won, falling 2.9 won from the previous trading day, and recording near its lowest level in about two years since on Oct. 2, 2024. The exchange rate has lowered its bottom for four consecutive trading days. The global trend of a weaker dollar, coupled with the influx of foreign investors’ funds into the domestic stock market, exerted upward pressure on the value of the won. While the falling exchange rate acted as a factor enhancing the attractiveness of the domestic stock market for foreign investors, it remains an area requiring continuous monitoring concerning the price competitiveness of export-driven companies. On this day, the domestic stock market technically and flawlessly reversed the excessive plunge of the previous day, proving the market’s fundamental stamina. Although the recovery of supply and demand, spearheaded by large-cap semiconductor stocks, drove the successful landing at the 5,700 mark, factors such as fatigue from the short-term surge, the sustainability of foreign supply and demand, and the volatility of the exchange rate have been left as major variables that will determine any further ascent of the stock market in the future.