Kosdaq Falls Short of 52-Week High as Foreign Selling, Biotech Losses Cap Gains

Source

Korea Economic Daily

Summary

The Kosdaq's gains were limited by foreign selling and a decline in biotech shares, leaving it short of a new 52-week high.
Brokerages said the appeal of growth stocks has weakened because of high oil prices, the difficulty of cutting rates, and waning confidence in biotech companies.
Still, they said that if large-cap stocks such as Samsung Electronics and SK Hynix pause, the Kosdaq — particularly semiconductor materials, parts and equipment stocks and secondary-battery shares — could lead the next leg higher.

Forecast Trend Report by Period

Foreign selling, biotech losses cap gains

Kosdaq may gain traction if Samsung, SK Hynix pause

The Kospi surged 2.72% to a record close on April 21, but the Kosdaq ended only slightly higher. Retail investors who sold large-cap stocks such as Samsung Electronics to lock in profits rotated into the Kosdaq, though gains were limited by foreign selling and a broad slide in biotech shares.

The Kosdaq rose 0.36% to close at 1,179.03. It climbed more than 1% early in the session, but swung between gains and losses in the afternoon and failed to top its 52-week closing high of 1,192.78 set on Feb. 27. The index's record high remains 2,834.40, reached on March 10, 2000.

Biotech shares were the main drag. EcoPro and EcoPro BM, two of the Kosdaq's biggest companies, each gained more than 5% on strength in the secondary-battery industry. But major biotech names all declined. Voronoi sank 10.07%, while Kolon TissueGene and LigaChem Biosciences fell 5.75% and 2.5%, respectively.

Brokerages attributed the weakness to domestic and external uncertainty that has eroded the appeal of growth stocks. Hur Jae-hwan, a managing director at Eugene Investment & Securities, said persistently high oil prices make it harder to cut interest rates, undermining the appeal of future-growth industries such as biotech. He added that confidence in biotech companies has weakened more broadly in the wake of the Samchundang Pharm episode. Samchundang Pharm, which at one point ranked as the Kosdaq's largest company by market capitalization, has seen its share price roughly halve to around 470,000 won from 1.18 million won amid controversy over inadequate disclosures.

Foreign investor demand has also been weaker than in the Kospi. Foreigners bought a net 1.2415 trillion won of Kospi stocks on April 21, but sold a net 349.4 billion won of Kosdaq shares. Hur said the market is currently being led by foreign-driven large-cap Kospi stocks, leaving the Kosdaq to follow in their shadow for the time being.

Still, some in the market say the Kosdaq could see stronger gains once large-cap names such as Samsung Electronics and SK Hynix pause. In particular, they said semiconductor materials, parts and equipment makers, along with secondary-battery stocks backed by solid earnings, could lead any advance in the Kosdaq.

Lee Sun-a, Hankyung.com reporter suna@hankyung.com