Retail investors, who have consistently engaged in 'buying the dip' during market downturns, appear to be breaking from this pattern. Despite significant declines in the market, these investors have shifted to net selling, unloading over 2 trillion won in stocks during recent rebounds. Analysts attribute this change to a combination of peak-out fears and a decrease in the momentum of market rebounds, pushing individual investors toward panic selling.
According to the Korea Exchange, retail investors net purchased 7.465 trillion won worth of stocks on July 2, when the KOSPI index plummeted by 655.32 points. They continued to buy 3.5931 trillion won and 3.5222 trillion won on July 6 and 7, respectively, providing support as the index fell. However, a reversal occurred on July 8, when the KOSPI dropped 5.35% to 7,246.79 points. Fearing further declines, retail investors broke their usual pattern and net sold 691.4 billion won. In contrast, foreign investors net bought 810.9 billion won.
On July 9, the KOSPI rose slightly, closing at 7,291.91, up 45.12 points (0.62%) from the previous trading day. Foreign investors (305.5 billion won) and institutions (1.8663 trillion won) returned to net buying, which helped lift the index, while retail investors sold off 2.1176 trillion won, indicating a strong selling trend.
The selling pressure from retail investors also affected domestic semiconductor stocks. Samsung Electronics closed at 278,000 won, up 0.18% (500 won), but trading volume was only 29.7 million shares, far below the 38.9 million shares on July 2 and 33.52 million shares on July 8. SK Hynix, which surged 5.30% to 2,186,000 won, recorded a trading volume of 13.695 trillion won, but this was also lower than the 17.7745 trillion won on July 2 and 15.2559 trillion won on July 8.
Kim Doo-eon, a researcher at Hana Financial Investment, noted, 'Unlike in the past, the recent decline in the index has been rapid, while the recovery has been weak and trading volume has dried up. Concerns about high valuations, leading stocks, and the outlook for the memory cycle are all weighing on investor sentiment.'
Baek Young-chan, head of the research center at Samsung Securities, emphasized that 'operating profits for semiconductor companies are expected to increase in the third and fourth quarters compared to the second quarter, and the upward trend in earnings remains intact.' He added, 'Some argue that semiconductor stocks will face corrections as operating profit margins can no longer rise, but the key point is that both operating profits and sales continue to grow. Currently, the market shows no signs of overheating, unlike past major downturns.' Choi Hyun-jae, head of the research center at Yuanta Securities, also analyzed that the recent stock price decline is largely due to foreign investors realizing profits and rebalancing after a rapid rise in the KOSPI.
Looking ahead, as the concentration in the semiconductor sector eases, there is a high possibility of a rotation into undervalued sectors. Baek identified promising sectors such as securities, banking, department stores, biotechnology, shipbuilding, automotive, and consumer goods, while Choi suggested sectors with solid earnings like shipbuilding, defense, heavy industry, as well as securities, department stores, consumer goods, and, in the short term, bank stocks due to interest rate hikes.
* This article has been translated by AI.
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