07/28 Korea Market Morning Briefing — Indices Rebound, But Foreign Net Selling in Equities & Futures Persists

KOSPI closed at 6,755.75, up 0.97% from the previous session, while KOSDAQ rose 2.22% to 764.86. Although KOSDAQ experienced a larger rebound, on a recent time-series basis, KOSPI is down 6.78% and KOSDAQ is down 2.57% compared to July 8, indicating that volatility remains ongoing.

In terms of trading supply and demand on KOSPI, foreign investors recorded net selling of 2.88 trillion KRW, institutions recorded net buying of 0.86 trillion KRW, and retail investors recorded net buying of 1.98 trillion KRW. Foreign investors continued net selling for a second consecutive day following 3.27 trillion KRW net selling on the previous trading day, while institutions turned from net selling to net buying. On KOSDAQ, foreign investors were net sellers of 142.2 billion KRW, whereas institutions were net buyers of 273.1 billion KRW.

Spot market rebounds and futures positioning diverged. In KOSPI200 futures, foreign investors were net sellers of 2,085 contracts, while institutions were net buyers of 2,365 contracts. US overnight futures showed a mixed performance, with Dow futures +0.54%, S&P500 futures +0.07%, and Nasdaq100 futures -0.25%.

The most distinct point in yesterday's data was overall market foreign selling accompanied by partial defensive buying by institutions. On KOSPI, institutional net buying supported the rebound, but the magnitude of foreign selling was larger, and foreign selling was also confirmed in futures. Therefore, whether the intensity of foreign spot and futures selling moderates—rather than the index rebound itself—serves as the key variable for short-term market direction.

In yesterday's key disclosures, NAVER's rights offering decision, LS Eco Energy's convertible bond issuance decision, Korea Advanced Materials' convertible bond issuance decision, and Willbes' correction disclosure regarding debt restructuring procedures were recorded. Disclosures involving capital raising or potential dilution require additional verification of conditions and scale in the original filings. (Source: DART)

According to Bank of Korea ECOS as of July 27, the 3-year Treasury bond yield was 3.865%, the 10-year yield was 4.333%, and the term spread was 46.8 bp. The credit spread between 3-year AA- corporate bonds and 3-year Treasury bonds was 71.1 bp. Interest rate levels continue to require monitoring as discount rate variables for growth stocks and high-valuation names. Today, with the US FOMC meeting underway, domestic market sentiment at the open may be influenced by foreign spot/futures flows and weakness in semiconductor ADRs.

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