Index slides as much as 1.28% intraday before reversing to close above 6,830 for second straight session of late recovery

Other corporations post 1.67 trillion won in net purchases, single-handedly defending the index

An employee monitors stock market and exchange rate data at Hana Bank's headquarters in Jung-gu, Seoul, on Tuesday. The Kospi closed up 15.78 points, or 0.23 percent, at 6,835.80 that day. [Yonhap]
An employee monitors stock market and exchange rate data at Hana Bank's headquarters in Jung-gu, Seoul, on Tuesday. The Kospi closed up 15.78 points, or 0.23 percent, at 6,835.80 that day. [Yonhap]

The Kospi reversed course in the final stretch of trading Tuesday, closing higher even as foreign, institutional and individual investors all sold at once, with buying attributed to share buybacks by Samsung Electronics and SK hynix providing a floor for the index.

The benchmark index ended Tuesday up 15.78 points, or 0.23 percent, at 6,835.80. It opened down 35.73 points, or 0.52 percent, at 6,784.29, and at one point during the session slid as far as 6,732.47, a decline of 1.28 percent. The index then pared losses through a series of swings before turning positive late in the day. The pattern mirrored Monday's session, when the Kospi also shed more than 3 percent early before recovering — marking two consecutive sessions of weakness early and strength late.

All three major investor groups were net sellers in the Kospi on Tuesday. Institutions led the selling with 634 billion won ($462 million) in net sales, while foreigners offloaded 486.7 billion won and individual investors sold 539.8 billion won.

The sole buyer in an otherwise sell-heavy market was the "other corporations" category, which reflects share buybacks by Samsung Electronics and SK hynix. The group posted 1.67 trillion won in net purchases on Tuesday, defending the index throughout the session and ultimately driving the positive close. The buying was consistent across time slots, accumulating at a pace of at least 200 billion won and approaching as much as 300 billion won per interval, providing sustained support against downward pressure.

Since the two companies launched their respective buyback programs, other-corporation buying has become a new pillar of Kospi supply-and-demand dynamics. From Aug. 20, when SK hynix began its buyback, the category has recorded more than 1 trillion won in daily net purchases. After Samsung Electronics joined on Aug. 24, the daily inflow climbed further to the 1.5 trillion to 1.6 trillion won range.

Foreign investors, who were net sellers overall, showed mixed trading in top-cap names — selling Samsung Electronics while buying SK hynix. With the Kospi stuck in a range following recent sharp swings and individual buying momentum fading, foreign investors appear to be reasserting their influence on the market. Despite posting 486.7 billion won in net sales for the day, foreigners were the biggest net buyers of SK hynix, picking up 166.8 billion won worth of shares.

Foreigners sold 184.5 billion won worth of Samsung Electronics common shares while buying 20.4 billion won worth of Samsung Electronics preferred shares. The preferred shares have drawn attention amid expectations that Samsung Electronics could increase the proportion of preferred shares in its ongoing share buyback and cancellation program. Because preferred shares carry no voting rights, they are interpreted as being excluded from ownership-cap calculations under the Financial Industry Capital Act, meaning financial affiliates can accumulate them without the additional pressure to divest stakes that applies to common shares.

With selective and divergent trading by foreigners and institutions offsetting the buyback effect, share price moves among top-cap stocks were mixed. Samsung Electronics rose 0.38 percent, SK hynix gained 1.14 percent, Samsung Electronics preferred shares advanced 2.04 percent, SK Square climbed 2.89 percent and Samsung C&T added 3.72 percent. On the losing side, Samsung Electro-Mechanics fell 1.92 percent, LG Energy Solution dropped 2.91 percent and Hyundai Motor declined 0.74 percent.

The Kosdaq fell 13.04 points, or 1.56 percent, to close at 821.25, declining for a second consecutive session. Individual investors bought 433.7 billion won worth of shares, but institutions and foreigners sold 153.5 billion won and 274.8 billion won, respectively, dragging the index lower.


kacew@heraldcorp.com