The Kospi has returned to the 2600 level for the first time in a year. Stock markets across Asia were buoyed as fears of a U.S. federal government default eased and expectations of a rate hike by the U.S. central bank (Fed) spread.

On the second day, the benchmark KOSPI gained 32.19 points, or 1.25 per cent, to close at 2601.36. It is the first time in about a year that the index has regained the 2600 level at the close since 9 June last year (2625.44). Foreigners bought 374.2 billion won and institutional investors added 95.5 billion won, boosting the index. Retail investors realised gains as they net sold 572.2 billion won. Large-cap stocks such as Samsung Electronics (1.83 per cent), LG Chem (4.95 per cent), Hyundai Motor (1.01 per cent) and POSCO Holdings (4.29 per cent) led the index’s gains.

The market was positively impacted by the fact that the U.S. debt limit deal negotiated by President Joe Biden and House Speaker Kevin McCarthy (R) passed the Senate on Monday (local time), virtually eliminating fears of a federal government default. “Investor sentiment improved as default concerns were resolved and expectations for the Fed to keep the key interest rate unchanged this month grew,” said Jung Sung-han, head of Shinhan Asset Management’s Alpha Application Centre.

This led to a parallel rise in Asian stocks. Japan’s Nikkei 225 closed up 1.21% on the day at 31,524, its highest level in nearly 33 years since 25 July 1990, during the bubble economy. China’s Shanghai Composite (0.79%) and Hong Kong’s Hang Seng (4.02%) also closed higher.

The KOSPI, which started the year at 2236.40, has regained the 2600 mark largely on the strength of foreign funds. Foreigners have been net buyers of 13.757 trillion won this year, the most since statistics began in 1998.
KOSPI reclaims 2600 for the first time in a year
US federal default fears eased…Fed rate hike expectations boosted stocks
Expectations for a rally in the second half of the year are growing as the benchmark Kospi broke through the 2600 level on Tuesday amid record buying by foreign investors. With semiconductor giants such as Samsung Electronics and SK Hynix returning to the lead, and the US debt limit deal that had been weighing on global stocks being resolved, the KOSPI is expected to break through the 2700 level sooner than expected.
○ Foreign net purchases record high
According to the financial investment industry on the 2nd, the average KOSPI band for the second half of the year according to 12 major domestic securities firms is 2200~3000.

DB Financial Investment, which had the most positive outlook, expected the KOSPI to break through the 3000 level, while KB Securities put the upper end at 2920. Samsung Securities, which offered the most conservative forecast, believes the KOSPI will remain in the 2200-2600 range.

“We expect foreign investors to continue to buy semiconductors and auto stocks in the second half of the year,” said Kim Seung-hyun, head of research at Yuanta Securities, adding, “We see the top of the KOSPI at 2800 in the second half.”

Investor sentiment improved as the U.S. debt ceiling deal, which had been a major obstacle to the stock market, passed faster than expected. Foreign buying is likely to continue as safe-haven appetite and the strong dollar weaken.

Foreign investors were net buyers of $13.757 trillion in the securities market from 2 January to today. This is the highest since statistics began in 1998. It is also larger than in 2009 (10.3454 trillion won), just after the global financial crisis.
○ Will the semiconductor uptrend continue?
There are growing voices in the stock market that the semiconductor industry will recover from the second half of the year. When semiconductors entered the supercycle, new demands such as data centres and cryptocurrencies arose, but this time, the artificial intelligence (토토사이트AI) industry is expected to grow the semiconductor market.

Foreigners have bought 10.67 trillion won worth of Samsung Electronics alone this year. Including SK hynix (1.587 trillion won), they have spent 90 per cent of their total net purchases on semiconductor stocks. Samsung Electronics shares closed the day up 1.83 per cent at 72,200 won. The stock has risen 30.56 per cent this year to regain the 70,000 won mark, driven by foreign buying, nearly doubling the KOSPI’s gain (16.31 per cent) over the same period.

However, there are some who say it is difficult to be optimistic as concerns of a downturn have not been fully resolved. “As China’s economic momentum slows down somewhat in the third quarter, downward pressure on the domestic stock market may increase due to the slowdown in the US and Europe,” said Lee Kyung-min, head of investment strategy at Daeshin Securities. Kim Young-hwan, a researcher at NH Investment & Securities, also said, “Semiconductors have led the Korean stock market’s recent gains, but stock prices have risen quite fast compared to the outlook for economic recovery.”