The KOSPI index, unable to avoid the direct impact of soaring oil prices and interest rates, slipped by nearly 4%. This was due to foreign investors and institutional investors collectively selling off assets nearing 4 trillion won amid heightened risk-aversion sentiment. However, market volatility has subsided, and the sidecar (futures market circuit breaker), which temporarily halts program trading orders, remained inactive for nine consecutive trading days. As the earnings season draws to a close, attention turns to whether Broadcom's upcoming earnings report will serve as a turning point for sentiment in the semiconductor sector.
On the 2nd, the KOSPI index closed at 6,562.72, down 273.08 points (3.99%) from the previous trading day. Escalating tensions between the United States and Iran led to a sharp rise in both international oil prices and U.S. Treasury yields within two days, dampening investor sentiment.
From a supply-demand perspective, a contraction in investor sentiment centered on foreign investors and institutional investors was particularly pronounced. According to Korea Exchange data, foreign investors and institutional investors sold off net amounts of 1.9195 trillion won and 2.0433 trillion won, respectively, on the day. Foreign investors had seen net buy/sell volumes remain below 1 trillion won for five consecutive trading days from the 26th of last month through the previous day, but today they dumped nearly 2 trillion won in assets, limiting index gains. The scale of institutional investors' net selling reached its highest level since March 3rd. Retail investors purchased net amounts of 2.3023 trillion won, while other corporations bought 1.6504 trillion won, supported by share buybacks from Samsung Electronics and SK Hynix.
Lee Gyeong-min, head of the FICC Research Division at Daishin Securities, stated, "The domestic stock market turned bearish as risk-aversion sentiment expanded in response to rising U.S. Treasury yields and international oil prices." He added, "Although buying pressure from other corporations centered on Samsung Electronics and SK Hynix supported the lower end of the index despite recent external uncertainties, it proved insufficient to offset the selling pressure from foreign investors and institutional investors amid growing macroeconomic burdens."
However, despite an unstable macroeconomic environment, market volatility has subsided, so the sell-side sidecar (futures market circuit breaker), a market stabilization measure, was not triggered in the KOSPI market. The absence of activation for nine consecutive trading days marks the longest streak since April. The KOSPI 200 Volatility Index (VKOSPI) also closed at 43.37, down 0.66 points (1.50%) from the previous day, recording its lowest level since February 19th. While volatility has not absolutely decreased to levels below the crisis threshold of 40, the fact that it has fallen for eight consecutive trading days since the 24th of last month is viewed positively.
Heo Jae-hwan, Executive Director at Eugene Investment & Securities, explained, "Since late July, as the market rebounded, trading volume and value declined significantly, leading to reduced volatility. In a phase where stock prices are correcting, declining trading volume and value indicate that selling pressure has diminished."
All 30 stocks within the top tier by market capitalization closed lower. Samsung Electronics and SK Hynix fell by more than 4%. Hyundai Motor and Kia each dropped over 5% amid sluggish electric vehicle sales. LG Energy Solution, a leading battery stock that recently rebounded, also declined by more than 5%.
The KOSDAQ index also showed weakness, closing at 803.98, down 17.27 points (2.10%) from the previous trading day. Institutional investors sold off assets worth 231.9 billion won, while retail investors and foreign investors purchased 172.3 billion won and 62.9 billion won, respectively.
As the earnings season concludes and events expected to provide momentum diminish, attention focuses on whether Broadcom's earnings announcement on the 3rd can trigger a market turnaround. Im Jeong-eun and Tae Yun-seon, researchers at KB Securities, noted, "Despite Dell's strong earnings report released early this morning, the positive impact on investor sentiment in Korea's semiconductor sector remained limited." They added, "It remains to be seen whether Broadcom's earnings announcement will serve as a turning point."
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