Kospi recovers 5,750 level, turns positive at 9:36 a.m.

Institutions net buy 421.7 billion won; foreigners, individuals both sell

SK hynix rises 1.27%; Samsung Electronics falls 1.56%

The Kospi and Kosdaq indexes are displayed on a screen at Hana Bank's dealing room in Jung-gu, Seoul, on Monday. The Kospi opened lower that day. [Yonhap]
The Kospi and Kosdaq indexes are displayed on a screen at Hana Bank's dealing room in Jung-gu, Seoul, on Monday. The Kospi opened lower that day. [Yonhap]

The Kospi turned positive Monday morning despite a more than 7 percent plunge in the Philadelphia Semiconductor Index overnight. After opening lower, the benchmark index clawed back its losses on the back of more than 420 billion won ($314 million) in net institutional buying, recovering the 5,750 level. Samsung Electronics continued to slide while SK hynix reversed course to trade higher, with the two semiconductor heavyweights moving in opposite directions.

According to Korea Exchange, the Kospi stood at 5,750.68 as of 10 a.m. Monday, up 19.94 points, or 0.35 percent, from the previous session. The index had opened down 92.97 points, or 1.62 percent, at 5,637.77 before turning positive at around 9:36 a.m. The Kospi had surged 6.63 percent on Wednesday to reclaim the 6,000 level, but then fell 1.24 percent on Thursday and 3.48 percent on Friday before attempting a rebound Monday — its first in three sessions.

Institutions drove the recovery on the main board, posting net purchases of 421.7 billion won. Individuals and foreign investors were net sellers, offloading 261 billion won and 206.4 billion won, respectively.

Samsung Electronics traded at 221,500 won, down 3,500 won, or 1.56 percent, from the previous close. The stock opened at 220,500 won before paring some of its losses. SK hynix rose 18,000 won, or 1.27 percent, to 1.436 million won. The chipmaker opened at 1.352 million won but fully reversed its early decline to trade in positive territory.

Among large-cap stocks, Samsung Electronics preferred shares, Samsung Electro-Mechanics, Samsung Biologics and KB Financial Group all fell. SK Square, LG Energy Solution and Hyundai Motor were among the gainers.

The Kosdaq was down 0.38 points, or 0.05 percent, at 724.00 at the same time, after opening 7.94 points, or 1.10 percent, lower at 716.44.

Domestic markets opened lower in the wake of a sharp selloff in US semiconductor stocks. The Philadelphia Semiconductor Index tumbled 7.20 percent on Friday (local time), while the NASDAQ Composite fell 2.86 percent. Intel cratered 28.6 percent after its fourth-quarter earnings outlook came in below market expectations. Other major chipmakers also declined, with AMD falling 10.9 percent, Nvidia dropping 4.2 percent and Micron sliding 5.3 percent.

Concerns over deteriorating cash flows from heavy capital spending in the AI sector also weighed on sentiment. Amazon posted negative free cash flow of $42.4 billion over the past 12 months as it ramped up investment in AI infrastructure. Worries about the semiconductor industry deepened further after Japan's Kioxia issued a weak earnings outlook. The pace of capital expenditure growth at major tech companies has outstripped the improvement in operating cash flows, heightening concerns about return on investment and financing burdens.

Analysts said the sharp Kospi decline on Friday may have been excessive, leaving room for bargain hunters to step in. However, they cautioned that volatility is likely to persist this week ahead of US jobs data, the midterm elections, and earnings releases from major companies including Palantir and AMD.

"Friday's Kospi plunge has the hallmarks of an overreaction, so there is room for bargain buying to come in — but investors need to be prepared for heightened volatility as major US events play out through the week," said Han Ji-young, an analyst at Kiwoom Securities. "Rather than reducing exposure in response to this week's volatility, a wait-and-see approach is likely to be more effective." Han projected the Kospi's trading range for the week at 5,400 to 6,000 points.


hajun825@heraldcorp.com