"Let's Get Out Fast": Foreign Investors Absorb 8 Trillion Won Sold by Individuals... Will KOSPI Continue Its Rebound? [Market ING]

Last week, the Korean stock market shattered multiple records, making for an unprecedented week. For the first time in history, circuit breakers were triggered simultaneously on both the Korea Exchange (KRX) and KOSDAQ markets for two consecutive days. KOSPI experienced both the second-largest daily drop and fourth-largest daily percentage loss ever recorded, only to set new all-time records for largest daily gain and largest percentage increase shortly afterward. SK hynix hit its first-ever daily upper limit, and companies ranked second, third, and fourth by market capitalization also reached their daily price ceilings. On July 31, foreign investors posted the largest net purchases in history, while individual investors recorded the highest net sales, resulting in a series of record-breaking statistics. Attention now turns to whether KOSPI, which nearly recovered last week's losses and climbed back above the 6,500 mark, can maintain its upward momentum this week.

Yonhap News Agency

Last week, KOSPI fell by 1.42% and KOSDAQ dropped by 3.80%. KOSPI plummeted over 10% on July 28 and continued to drop sharply for three consecutive days, falling to the 5,500 level. However, on July 31, KOSPI surged by 17.91%, rising more than 1,000 points in a single day and recovering most of its losses. It was the first time in the history of the Korean stock market that KOSPI rose by over 1,000 points in one day. Jaewon Lee, a researcher at Yuanta Securities, explained, “On July 31, KOSPI and KOSDAQ rallied by 17.9% and 11.6%, respectively, recovering the majority of last week's steep declines. Driven by strong earnings and favorable outlooks for big tech (large IT companies) at the start of the session, both indices triggered buy-side circuit breakers, and the gains continued to expand without any retracement until the end of trading.”

The normalization of market flows that had been suppressing the stock market is expected to create a more favorable environment. Lee noted, “On July 31, foreign investors absorbed most of the roughly KRW 8 trillion in net sales by individuals on the KOSPI spot market. The surge in prices prompted individuals to take profits while foreigners stepped in as buyers. Additionally, the implementation of new regulations on margin deposits for single-stock leverage products, effective that day, is expected to stabilize supply and demand by lowering turnover ratios.” Jeongeun Lim, a researcher at KB Securities, also commented, “With factors causing supply-demand instability being resolved, upward momentum is taking precedence, raising expectations that the market is entering a bottoming-out phase.”

This week, market participants will be closely watching for earnings reports from U.S. companies that serve as benchmarks for the artificial intelligence (AI) industry. Jeonghwan Na, a researcher at NH Investment & Securities, said, “This week, U.S. firms such as AMD, SanDisk, and Western Digital will announce their results, providing insight into the AI hardware business trend. It is estimated that Anthropic, a leader in AI demand, saw its annual recurring revenue (ARR) surge from $47 billion in May to $74 billion in July, demonstrating continued earnings growth across both AI hardware and software. As this is sequentially confirmed, confidence in the earnings of domestic semiconductor companies is expected to be restored.”

Kyungmin Lee, a researcher at Daishin Securities, stated, “The key variable for the upcoming rebound will be confirmation from late-July and early-August big tech earnings reports that show continued expansion in capital expenditures (CAPEX) and dispel concerns about a slowdown in AI investment. If tangible improvements in profitability through AI adoption are also verified, it could serve as a powerful trigger for a market turnaround.”

Key events this week include: the U.S. Institute for Supply Management (ISM) manufacturing index for July on August 3; the U.S. Job Openings and Labor Turnover Survey (JOLTs) for June on August 4; the U.S. ADP private employment change and ISM services index for July on August 5; and the U.S. July employment report on August 7.

Researcher Na commented, “The market consensus for the U.S. July unemployment rate, to be announced on August 7, stands at 4.3% (up from the previous month’s 4.2%), a disappointing figure. If employment data is indeed weak, it could ease concerns about further rate hikes and be favorable for stock prices.”

Corporate earnings releases will also continue. In the U.S., Palantir is scheduled for August 3, SpaceX and AMD for August 4, and SanDisk and Western Digital for August 5. In Korea, EcoPro, Hanwha, and Kakao Pay will announce results on August 4, while Kakao and CJ ENM, as well as NAVER, Kumho Petrochemical, and Lotte Chemical, will release their Q2 earnings on August 6.

This content was produced with the assistance of AI translation services.