Samsung Electronics and SK Hynix Hit 52-Week Highs as Buying Accelerates along with the warning that the Rally May Be Overheated
The closing prices of the KOSPI, SK Hynix, and Samsung Electronics are displayed on the dealing room board at the headquarters of Shinhan bank in Jung-gu, Seoul, on April 11. (Photo courtesy of Shinhan Bank)/,
The KOSPI pressed higher without pause. On May 11, it climbed into the 7,800s for the very first time, placing the 8,000-point mark within striking distance.
The index closed at 7,822.24, up 324.24 points (4.32%) from the previous session, leaving 177.76 points to go before the 8,000 level.
The KOSPI opened at 7,775.31, up 277.31 points (3.70%) from the previous trading day, and extended its gains through the session. At one point intraday it surged as high as 7,899.32, a rise of 5.35%, coming within reach of the 7,900 level. The early-session spike triggered the temporary suspension of program buy orders on the KOSPI market, a mechanism known as a buy-side sidecar.
In the Seoul foreign exchange market, the won-dollar weekly trading closing rate as of 3:30 p.m. came in at 1,472.4 won per dollar, up 0.7 won from the previous trading day.
On the securities market, individual investors and institutional investors were net buyers of 2.869 trillion won (approximately $1.95 billion) and 624.7 billion won (approximately $424.3 million), respectively, acting as a two-pronged force that drove the index higher. Foreign investors, by contrast, were net sellers of 3.508 trillion won (approximately $2.38 billion), extending their selling run to three consecutive trading days through May 11.
The domestic market continued its advance despite noise surrounding a potential US-Iran conflict. Across-the-board gains in semiconductor stocks on the New York Stock Exchange on May 8 (local time) appeared to have stoked fresh buying interest.
With bullish outlooks pouring in from brokerages at home and abroad, individual investors poured more than 2.5 trillion won (approximately $1.70 billion) into just two names, Samsung Electronics and SK Hynix. Institutional investors also picked up more than 1 trillion won (approximately $679.3 million) worth of the two stocks combined, absorbing the supply offloaded by profit-taking foreign investors. Samsung Electronics closed up 6.33% at 285,500 won (approximately $193.90) per share, while SK Hynix ended up 11.51% at 1,880,000 won (approximately $1,277.01) per share, with both simultaneously setting new 52-week highs.
By sector, electrical and electronics equipment led the advance with a gain of 6.87%. Manufacturing (5.34%), transportation equipment and parts (4.15%), and distribution (3.15%) also posted strong moves.
Of the 835 stocks listed on the KOSPI market, however, only 147 posted gains on the day while 738 declined, pointing to a rally concentrated in a narrow group of names rather than broad-based strength across the index.
Alongside the KOSPI’s charge, the combined market capitalization of Korea’s domestic stock market of the KOSPI and the KOSDAQ surpassed 7,000 trillion won (approximately $4.75 trillion) for the first time in history, according to the Korea Exchange.
Brokerages forecast that the KOSPI’s advance would carry through to the 8,000 level. JP Morgan set a KOSPI target of 10,000 in its bull-case scenario and 9,000 in its base case. Goldman Sachs and NH Investment Securities projected 9,000, Citigroup projected 8,500, and Daeshin Securities projected 8,800.
Lee Gyeong-min, a researcher at Daeshin Securities, said, “The KOSPI is entering a phase in which volatility from geopolitical risks is being left behind, with solid fundamental drivers and earnings momentum expanding the room for further upside.” He added, “If a ceasefire agreement is reached and economic shocks prove to have been unfounded concerns, the upward momentum will strengthen.”
Overheating warnings tied to the rapid short-term surge were also mounting. The VKOSPI, South Korea’s version of the fear index, rebounded to 65.50, matching levels seen when the US-Iran conflict escalated in March, while the Buffett indicator stood at 260.71% as of May 6.
Yoon Young-sil
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