With uncertainty surrounding the U.S. midterm elections resolved by a landslide victory for the Democratic Party, both the KOSPI and KOSDAQ closed slightly higher on Wednesday. Stocks benefiting from the “Blue Wave” (Democratic Party victory) surged, while sector-specific divergence is expected to continue in the remaining days of the week due to third-quarter earnings releases.
The KOSPI ended trading at 5,683.8, up 35.01 points (0.62%) from the previous session. After opening at 5,786.13, a gain of 137.34 points (2.43%), the KOSPI rose by over 3% in early trading to touch the 5,800 mark before slipping to the 5,400 level amid heavy net selling by foreign investors.
In late trading, continued net buying by retail and institutional investors supported a modest gain at the close. According to Korea Exchange data as of 4:04 p.m., retail investors recorded net purchases of 1 trillion 147.9 billion won, while institutional investors bought a net 1 trillion 14 billion won. Foreign investors were provisionally tallied with net sales of 2 trillion 506.3 billion won.
Among top market capitalization stocks, large-cap semiconductor names closed slightly lower, while eco-friendly and secondary battery sectors showed strength. Samsung Electronics, SK hynix, and SK Square ended slightly lower. LG Energy Solution surged by over 3%, and Samsung SDI jumped by over 9%. This is interpreted as driven by expectations of benefits for secondary battery and eco-friendly stocks following the Democratic Party’s landslide victory.
Kim Seok-hwan, an analyst at Mirae Asset Securities, said, “In the domestic stock market, themes such as solar power, ESS (Energy Storage Systems), secondary batteries, and renewable energy showed exceptionally strong performance on expectations of the Blue Wave (Democratic Party victory).”
He added, “It is estimated that bargain hunting inflows occurred following the resolution of election uncertainty, as U.S. overnight futures also quickly narrowed their losses in the afternoon.”
The KOSDAQ ended trading at 714.95, up 10.56 points (1.5%). Although the KOSDAQ fell to the 700th level during intraday trading, it closed higher as semiconductor materials, components and equipment and secondary battery sectors both showed strength.
In the KOSDAQ market, retail investors recorded net sales of 53.8 billion won, while institutional investors bought a net 63.5 billion won and foreign investors purchased a net 1 billion won.
Among top market capitalization stocks, Ecopro BM and Simtech each surged by over 9%. Ecopro rose by over 8%, and Jusung Engineering climbed by over 7%, showing strength. ISC gained by over 4%, and Rino Industrial rose by over 3%. Conversely, HLB fell by over 16% after news emerged of a delay in new drug review in the United States.
As a result, analysis suggests that bargain hunting inflows occurred as uncertainty surrounding the U.S. midterm elections dissipated.
Im Jeong-eun, an analyst at KB Securities, said, “The market rebounded as buying inflows followed the resolution of election uncertainty. A stock-specific earnings-driven market also persisted.”
Korea Aerospace Industries, which posted results exceeding market expectations, rose by over 11%, while LG Household & Health Care fell by over 11% due to an “earnings shock.”
“Major corporate earnings releases will continue in the remaining days of the week, and sector-specific divergence is expected to persist,” Im said.
Amid significant stock price volatility on the day, advice emerged that investors should first observe the U.S. market before responding.
Han Ji-young, an analyst at Kiwoom Securities, said, “Historically, domestic markets have exhibited high stock price volatility on the day of U.S. elections. Observation is currently the priority, and it is a realistic approach to wait for confirmation of the results from the main U.S. market session before taking action.”
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