"Korea Is the Cheapest in the World"…Stocks Rising as KOSPI Surges

Market Inside

Previously weak secondary batteries also 'stirred'…KOSPI looks set to reach its first 3500

KOSPI, 1% rise would enter 3500

Foreigners concentrate buying Samsung Electronics · Hynix

Securities firms: "The semiconductor rally will continue"

POSCO Future M · LG Energy Solution among others strong

Naver · Kakao also rise together

Large-scale selling by retail investors is a burden

The KOSPI strengthened its upward trend, setting another all-time high immediately after the U.S. Federal Reserve (Fed) decided to cut interest rates. The semiconductor sector's stock rally was hot, and existing leading sectors such as holding companies, financials, shipbuilding, defense, and nuclear power supported the strong trend.

Foreigners swept up even Samsung Electronics preferred shares

According to the Korea Exchange on the 18th, the KOSPI closed at 3,461.30, up 1.4% from the previous day, surpassing the record high set two days earlier. If it rises another 1.1%, it would enter the uncharted 3500 range. The KOSDAQ also closed up 1.37% at 857.11.

The 'semiconductor duo' led the rise, fueled by combined purchases from foreigners and institutions. For the first time in a while, secondary battery and large internet stocks also rose broadly, pushing up the index. In particular, Samsung Electronics (KRW 351 billion) and Samsung Electronics preferred shares (KRW 43.2 billion) ranked 1st and 2nd, respectively, in foreigners' net buying list that day. Foreigners have been 'shopping intensively' even for Samsung Electronics preferred shares this month. Up to that day they had net-bought KRW 3.2688 trillion of the common stock and purchased KRW 300.2 billion worth of preferred shares. Samsung Electronics preferred shares ranked 4th in foreigners' net buying during the period, ahead of Hyundai Rotem (KRW 257.1 billion) in 5th place.

SK Hynix also surged 5.85% that day, recording for the first time on a closing basis '350,000-nix'. It had fallen 4.17% the day before ahead of the Fed's Federal Open Market Committee (FOMC) but recovered the entire decline in one day.

Securities firms expect the semiconductor-led rally, which has swiftly become the KOSPI's main driver, to continue. The AI cycle is driving demand not only for high-bandwidth memory (HBM) but also for general memory. Han Dong-hee, a researcher at SK Securities, said, "In the past it was SK Hynix's solitary rally, but recently after Samsung Electronics, material, parts and equipment stocks have also surged," and added, "The Korean semiconductor sector is the cheapest AI stock in global markets."

Market warmth from rate cut expectations

Secondary battery and internet stocks, which had been struggling, also showed gains. POSCO Future M rose 4.57%, and cell makers such as LG Energy Solution (1.29%) and Samsung SDI (2.45%) were also strong. Naver and Kakao rose 2.14% and 3.52% respectively. LG Electronics jumped 5.52% on rumors it would be included in Tesla's humanoid robot 'Optimus' supply chain.

Analysts say the Fed's rate cut has warmed the market overall. As Fed Chair Jerome Powell emphasized an 'insurance cut', the dominant view is that the economy remains healthy. A representative of an asset management firm said, "It is positive that foreigners showed buying immediately after the rate cut," and explained, "They are forecasting additional cuts in a situation without a sharp economic downturn."

In addition, domestic policy uncertainty may disappear toward the end of the year. If measures such as a reduction in the tax rate for separate taxation on dividend income are enacted, beneficiary stocks such as holding companies and financial companies could rise together, potentially producing another strong upswing.

Kang Dae-gwon, CEO of Life Asset Management, said, "Taiwan's economy is about half the size of ours, but its stock market capitalization is higher," adding, "This is because stock prices surged after implementing separate taxation on dividend income in 2018." However, large-scale selling by retail investors is a burden. Even in this record rally, retail investors have net-sold KRW 9.8781 trillion on the KOSPI this month alone.

Reporter Park Han-shin phs@hankyung.com