[Opening Market] KOSPI Tries to Recover After 'Black Thursday'

On the morning of Oct. 16, KOSPI and KOSDAQ index figures are displayed on the electronic board at the dealing room of Hana Bank’s main branch in Jung-gu, Seoul. (Yonhap) Entering mid-October on Friday, Oct. 16, after the fierce storm of ‘Black Thursday’ that shook the South Korean stock market on the previous day passed, the domestic stock market initially opened in a phase of attempting a rebound by taking a breather and drawing in low-end buying. According to the Korea Exchange on this day, the KOSPI index opened higher at 5,653.99, up 99.77 points (1.80%) from the previous session, and has maintained its strength so far. At one point in early trading, it rose as high as 5,662.30 (+1.95%). Afterward, it gave back some of the gains, reducing the increase rate to 0.65% (5,590.33). The domestic stock market, which exhibited an extreme plunge of over 7% with circuit breakers triggered in both the KOSPI and KOSDAQ markets on the previous day, is seeking a technical rebound trend due to the excessive decline despite the unilateral exodus of global funds. On the previous day, the KOSPI collapsed to the 5,554.22 mark, pushed down by the massive dumping volume of foreign investors, but in early trading on this day, the decline was somewhat reduced, and a fierce battle between buying and selling is unfolding. The main culprit that collapsed the domestic stock market on Oct. 15 was undoubtedly the fierce selling offensive by foreign investors. In the KOSPI market on the previous trading day, foreigners struck the index by net selling an unprecedented massive fund of a staggering 3.624 trillion won (about $2.69 billion). Just entering this month, the cumulative net selling scale that foreign investors dumped in the domestic stock market has exceeded a staggering 18 trillion won. In particular, 2.5685 trillion won, amounting to about 71% of the foreign net selling volume, was intensively concentrated on the two top domestic semiconductor stocks, Samsung Electronics and SK hynix. This is because, despite global semiconductor value chain companies such as TSMC and ASML recording their highest performance ever, concerns over funding for AI infrastructure investment costs and prolonged high interest rates (e.g., CoreWeave corporate bond interest rates approaching 15%), along with the burden of U.S. CPI (3.7%) and PPI (6.3%) inflation indicators, acted in combination to strongly pressure semiconductor valuations. Against this indiscriminate ‘sell’ offensive by foreigners, retail and institutional investors launched a large-scale low-end buying defense. On the previous day, retail and institutional investors combined swept up about 2.98 trillion won worth of stocks, staking their lives on defending against the decline, but it was insufficient to fully absorb the unilateral concentration of supply and demand. Meanwhile, in the KOSDAQ market, foreigners showed a contrasting trend to the KOSPI by net buying 217.7 billion won worth, but retail and institutional investors recorded a selling dominance of 66.7 billion won and 163.2 billion won, respectively, failing to dodge the overall contraction in investment sentiment. On this day, the KOSDAQ opened at 772.17, up 11.35 points (1.49%), and is expanding its fluctuation range. The Trend of 'Foreign Selling Vs Institutional and Retail Buying' Continues As of 10:00 a.m. on this day, buying trends seeking to find stability and escape the panic market of the previous day are clashing with profit-taking and risk management supplies. According to real-time supply and demand aggregates in the middle of the morning session, foreign investors are somewhat adjusting their selling intensity after the shock of the previous day, but they are still maintaining a conservative attitude by continuing a net selling dominance of about 400 billion won to 500 billion won in the KOSPI market. On the other hand, institutional investors, who injected large amounts of funds to absorb the volume in the falling market on the previous day, turned to a net buying of around 200 billion won centered mainly on financial investments, and retail investors are also solidly supporting the lower bound of the index by drawing in a net buying trend of about 300 billion won, using the additional decline of the index as a low-end buying opportunity. Experts analyze that whether the daily net selling scale of foreigners is drastically reduced from the 3 trillion won range to enter a calming phase will be the first turning point in determining if the domestic stock market can consolidate a short-term bottom and find stability in the future. Net buying by retail and institutional investors also appeared in the KOSDAQ. Retail and institutional investors are net buying 85.5 billion won and 20.9 billion won worth of stocks, respectively, and foreigners are net selling 109.2 billion won worth of stocks. Major Top KOSPI Stocks Attempt to Rebound in Unison As of 10:00 a.m. on this day, major top KOSPI market capitalization stocks are showing attempts to rebound in unison, escaping the record-breaking plunge of the previous day. Large-cap semiconductor stocks, which recorded massive crashes of around 10% on the previous day, are showing an influx of buying trends thanks to the perception that they have entered an oversold section. Samsung Electronics is trading at the 214,500 won mark, rebounding 4,500 won (about 2.14%) from the previous trading day. Despite the favorable tentative performance in the third quarter (operating profit in the 107 trillion won range) on the previous day, it plummeted 9.48% and was pushed down to the 210,000 won mark due to ‘sell on news’ style sell-on supplies and concerns over AI profitability, but it is attempting a recovery by slightly lifting its head on this morning. However, the dominant view is that it requires further observation to see if a full-scale trend reversal will occur, as the cumulative decline rate for the single month of October exceeds 20%. SK hynix is recording the 1,289,000 won mark, up 27,000 won (about 2.14%) from the previous trading day. It is showing a strong flat trend, escaping the shock of plunging 11.06% to crash to 1,262,000 won on the previous day. As the decline was relatively large entering October (about a 28.9% drop) compared to Taiwan’s TSMC (-1.6%) and others, a low-end buying trend aiming for price merit is concentrating. Some holding and IT-related large-cap stocks, such as SK Square (+2.75%), are standing at the forefront of the rebound, and KOSPI large-cap stocks that plummeted together on the previous day, including secondary batteries, biopharmaceuticals, and automobiles, are also adding strength to the index defense by recording rebound trends in the 1~2% range in unison alongside the influx of low-end buying. Among the top KOSDAQ market capitalization stocks, Alteogen, PSK Holdings, and Samchundang Pharm rose in the 5~7% range, while Ecopro is moving flat and Ecopro BM is moving in a weak flat range. Won/Dollar Exchange Rate Opens at 1,341.5 Won, Down 3.0 Won from the Previous Day In step with the rapid volatility of the stock market, a sense of tension is also lingering in the foreign exchange market. The won-dollar exchange rate is repeating sensitive fluctuations in linkage with U.S. Treasury bond interest rate volatility, amidst the persistence of global safe-asset preference sentiment. In the bond market on the previous day, government bond interest rates received downward pressure due to the safe-asset preference phenomenon, and a decoupling pattern where stocks and bonds were simultaneously shaken also appeared. At 9:00 a.m. on this day, the won-dollar exchange rate recorded 1,341.5 won, down 3.0 won from the previous daytime closing price. Currently, along with wariness over fine-tuning by the foreign exchange authorities, market participants are keeping their senses sharp on upcoming external events. The Bank of Korea Monetary Policy Board meeting scheduled on Oct. 22 and the U.S. Federal Open Market Committee meeting to be held on Oct. 28 are expected to act as key turning points determining the future direction of the exchange rate and the mid- to long-term valuation of the domestic stock market. Currently, the domestic stock market is passing through the ‘peak of pessimism,’ experiencing a rapid correction of nearly 20% over 7 trading days. Despite the robust intrinsic fundamentals and performance of companies, the market’s stamina has been greatly consumed as a triple hardship overlaps: the high-interest-rate environment, concerns over serial counter-trading due to credit loan volumes, and the global AI profitability controversy. Investors’ attention is focused on whether the rebound that appeared this morning will stop at a simple technical reflex buying trend, or if it will become a stepping stone leading to a trend of stability by closing the successive plunging markets.