The KOSPI, which opened lower on the aftermath of a sharp drop in U.S. semiconductor stocks, switched to gains and widened its rise to close up by more than 2%. As the index fell in early trading, institutional investors and other corporations stepped in to buy, forming downside support.
However, concerns over volatility remain as major events are scheduled one after another this week, including the U.S. midterm elections and earnings reports from big tech companies.
The KOSPI closed at 5859.08, up 128.34 points (2.24%) on Monday. The index opened at 5637.77, down 92.97 points (1.62%), and fell as low as 5616.50, a drop of 114.24 points (1.99%), in early trading. However, it switched to gains during the morning session and expanded its rise.
Based on provisional figures immediately after the close, institutional investors and other corporations made net purchases of 133.54 billion won and 54.18 billion won, respectively, while retail investors and foreign investors made net sales of 186.34 billion won and 1.78 billion won, respectively.
Samsung Electronics closed at 229,000 won, up 1.78%. SK hynix ended trading at 1,472,000 won, a gain of 3.81%.
Among top market capitalization stocks, SK Square (5.91%), Hyundai Motor (1.77%), Samsung Electronics preferred shares (1.67%) and Samsung Life Insurance (0.55%) rose, while Samsung Biologics Logistics (-4.37%), KB Financial Group (-1.35%), LG Energy Solution (-0.97%) and Samsung Electro-Mechanics (-0.25%) fell. The KOSDAQ index closed at 734.36, up 9.98 points (1.38%).
The U.S.-originated semiconductor shock is cited as the cause of the early-session weakness. On the 29th of last month (local time), Intel released a fourth-quarter revenue forecast of $15 billion to $16 billion, significantly below market expectations, causing its stock price to plunge 28.58% on the New York Stock Exchange on the 30th (local time). Previously, Alphabet and Amazon also reported earnings that fell short of expectations, reigniting doubts about whether massive investments in artificial intelligence (AI) can be recovered in a timely manner.
What lifted the index on this day was buying pressure from institutional investors and other corporations. Among institutional investors, financial investors bought the most at 68.69 billion won, followed by investment trusts (25.74 billion won), pension funds (16.99 billion won), private equity funds (16.64 billion won), insurance companies (3.09 billion won), other financial institutions (2.00 billion won) and banks (0.39 billion won), all of which showed net buying.
Pension funds also made net purchases of 89.65 billion won on the 30th of last month. Researcher Kang Jin-hyuk at Shinhan Investment Corp said, "After the KOSPI fell to around 5,600, pension funds, financial investors and other corporations supported the downside," adding, "Inflows from pension funds have continued following their second-largest net purchase on record on the 30th of last month." SK hynix's share buyback was also pointed out as a factor supporting the lower bound of its stock price.
However, there is also a view that it remains to be seen whether concerns over excessive AI investment, which have been at the center of recent stock market instability, will be dispelled. The U.S. midterm elections held on the 3rd (local time) are considered an event that will determine the policy momentum of the Trump administration. Recent polls suggest a landslide victory for the Democratic Party in the House of Representatives and a narrow Democratic edge in the Senate amid tight races in swing states. This is a scenario where the so-called "Blue Wave," in which the Democratic Party takes over both the currently Republican-controlled Senate and House, becomes reality.
If the election ends with a Democratic victory, political uncertainty may be lifted and expectations of benefits for the renewable energy sector may emerge, potentially boosting investor sentiment in the short term. Apple, AMD and Palantir will release their earnings this week.
For Apple, the key issues are profitability burdens due to sales of new iPhone products and rising memory prices; for Palantir, it is the growth trend in revenue and profits from enterprise AI services; and for AMD, it is demand for data center graphics processing units (GPUs) and future revenue outlooks. In particular, Palantir's earnings are expected to serve as an opportunity to reconfirm whether AI infrastructure investment is actually translating into increased AI service revenue.
Researcher Han Ji-young at Kiwoom Securities said, "Fundamental recovery in investor sentiment depends on how much concerns over the AI industry can be alleviated."
The KOSDAQ index closed at 734.36, up 9.98 points (1.38%). On the KOSDAQ, institutional investors made net purchases of 6.23 billion won, while retail investors and foreign investors made net sales of 2.61 billion won and 3.22 billion won, respectively.
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