[Closing Market] KOSPI Surges Above 5,600 on AI Optimism

On theafternoon of Oct. 27, KOSPI and KOSDAQ indices are displayed on the electronic board at the dealing room of Hana Bank headquarters in Jung-gu, Seoul. (Yonhap) On Oct. 27, the domestic stock market shook off the sluggishness of the previous trading day and closed with a powerful rebound rally. In the New York stock market overnight, tech-focused investor sentiment improved significantly in tandem with expectations for the initial public offering (IPO) of Anthropic, a representative artificial intelligence (AI) company. In the domestic stock market as well, a massive inflow of low-price buying based on the perception of excessive declines strongly pushed the index upward. On this day, the KOSPI surged more than 3%, boosted by the simultaneous buying momentum of foreigners and institutions, recovering the 5,600 level in a single breath. The KOSDAQ market also rose in tandem, successfully rebounding for the first time in 4 trading days. The KOSPI finished trading at 5,638.34 points on this day, up 168.87 points (3.09%) from the previous trading day’s close of 5,469.47 points. Strong buying momentum flooded in right after the opening, causing the index to rise steeply. Amid the heated trading, the index even approached the 5,700 level as a buy-side sidecar was triggered at one point during intraday trading. Afterward, some profit-taking volume emerged due to the burden of the high point, but the index firmly defended the late 5,630 range through the close. Riding the upward trend, the KOSDAQ market also closed at 743.83 points, up 16.62 points (2.29%) from the previous trading day, turning to an uptrend for the first time in 4 trading days. The KOSDAQ, which had taken a heavy hit the previous day from the plunge in semiconductor equipment and materials, parts, and equipment stocks, saw buying momentum gather mainly around biotech and IT parts stocks as the warmth of the tech stock rebound spread. Foreigners and Institutions Lead Strong Index Explosion with Combined Buying In the KOSPI market, foreigners and institutions engaged in combined buying, powerfully driving the index explosion. Breaking away from their net selling stance until the previous day, foreign investors turned into the main players of the index rebound by recording a massive net purchase of about 593 billion won (about $447.98 million) in the KOSPI market on this day.  Institutional investors executed a large volume of low-price buying centered around financial investment and pension funds, reliably supporting the upward trend by recording a net buying advantage of about 280 billion won range (280.4 billion won) in the KOSPI market. Individual investors engaged in profit-taking and volume clearing amid the strong buying offensive of foreigners and institutions, displaying a net selling of about 940 billion won in the KOSPI market. In the KOSDAQ market, foreigners net bought in the 20 billion won range, and institutions net bought in the 150 billion won range. Individuals showed net selling in the 160 billion won range. Strong Rebound Rally Led by Semiconductor Bellwethers The top market capitalization stocks in the KOSPI market unfolded a strong rebound rally led by semiconductor bellwethers. Samsung Electronics and SK hynix, the number 1 and 2 stocks in market cap and the semiconductor ‘Top 2’, exhibited a steep upward trend. Overcoming the pain of the previous day’s weak close, Samsung Electronics rebounded sharply compared to the previous day, aided by AI momentum and the inflow of low-price buying. The stock showed a solid flow around the 224,000 won line and ended trading at 222,000 won, up 9,000 won (4.23%) from the previous trading day. In particular, buying momentum concentrated during intraday trading, successfully playing the role of the vanguard in the index increase. Reacting immediately to expectations of continued global artificial intelligence (AI) infrastructure investments and the favorable news regarding Anthropic, SK hynix recorded a steep margin of increase during intraday trading and closed at 1,341,000 won, up 66,000 won (5.18%). Major top market cap stocks that underwent a correction the previous day, such as LG Energy Solution, Hyundai Motor, and KB Financial Group, also joined the rebound ranks in unison, supporting the 3% surge in the index. Samsung Electro-Mechanics surged in the 7% range, pushing out LG Energy Solution (2.00%) to claim the number 4 spot in market capitalization (excluding preferred stocks). Hyundai Motor (0.87%), KB Financial Group (0.27%), Samsung Life Insurance (3.45%), and Samsung C&T (3.08%) also posted gains. Pharmaceutical and biotech stocks, such as Samsung Biologics (5.37%) and Celltrion (0.74%), showed weakness. SK Square (7.67%), Samsung Electro-Mechanics (7.42%), Samsung SDI (5.07%), Samsung Life Insurance (3.45%), and Samsung C&T (3.08%) also rose by large margins. LG Energy Solution (2.00%), Kia (1.33%), Hyundai Motor (0.87%), Shinhan Financial Group (0.35%), and KB Financial Group (0.27%) also closed higher. On the other hand, Samsung Biologics (-5.37%) and Celltrion (-0.74%) declined. Top market cap stocks in the KOSDAQ market also regained vitality. The rebound of semiconductor-related equipment and parts stocks, which had excessive declines the previous day, was extremely fierce. Major KOSDAQ tech stocks, such as Simmtech, Wonik IPS, Leeno Industrial, and EO Technics, recorded high growth rates approaching double digits or reaching several %, along with substantial fluctuation amounts, greatly increasing the upward pressure on the KOSDAQ index. Simmtech (9.23%), PSK Holdings (7.29%), Ecopro (6.74%), Ecopro BM (5.58%), Wonik IPS (4.92%), Jusung Engineering (4.30%), EO Technics (4.22%), and Leeno Industrial (4.07%) exhibited a surging trend. HPSP (2.67%), Robotis (1.83%), HLB (1.66%), and Rainbow Robotics (1.15%) also increased. In contrast, Alteogen closed flat, and Samchundang Pharm (-0.69%) declined. Won/Dollar Exchange Rate Closes at 1,323.7 Won, Up 0.6 Won from the Previous Day In the foreign exchange market on Oct. 27, the won/dollar exchange rate repeatedly experienced slight fluctuations near the previous day’s daytime trading close (1,323.1 won) and finished trading at 1,323.7 won, up 0.6 won. The exchange rate, which had broken its yearly low during intraday trading the previous day due to the inflow of negotiation volume from export companies at the end of the month, closed near the flatline amid a mixed trend where additional downward pressure and settlement demand (low-price buying) tightly opposed each other, as the stock market showed a strong rebound in the 3% range and global risk appetite partially recovered on this day. In the case of the bond market, after the 3-year Korea Treasury Bond closed at 3.789% and the 10-year bond at 4.074% the previous day, marking their lowest levels since August, bond yields staged a slight breathing spell as the stock market showed a strong rebound flow on this day. Experts forecast that while a sense of vigilance remains in the financial market ahead of the U.S. Federal Open Market Committee (FOMC) meeting, the technical rebound energy driven by the perception of excessive declines in the domestic stock market will act as the central axis of the market for the time being.