Retail investors, who had been net sellers of KOSDAQ shares for most of this year, bought more than 2 trillion won worth of stocks on the junior bourse last month, reversing course. Individuals stepped in as foreign investors dumped more than 1.8 trillion won in shares, and the KOSDAQ outperformed the KOSPI by more than 12 percentage points in August.
The KOSDAQ closed at 821.25 on the 1st, down 13.04 points, or 1.56%, from the previous session, according to the Korea Exchange. The index fell for a second straight session on concerns that the United States may raise interest rates.
Individual investors net bought 2.16 trillion won worth of KOSDAQ shares last month, shifting to net buying after selling more than they bought in June and July. Foreign investors, by contrast, swung to net selling of 1.84 trillion won last month after net buying in June and July.
Retail money concentrated on growth stocks, particularly semiconductors. Jeju Semiconductor topped the list of individual net purchases last month at 111.8 billion won, followed by JYP Entertainment at 79.5 billion won, Hana Micron at 66.9 billion won, VM at 64.3 billion won and Kolon TissueGene at 62.2 billion won. TAIHAN Fiberoptics, RFHIC, Kosmo Robotics, Robotis and Tes also ranked among the top 10. Combined net purchases of four chip-related names — Jeju Semiconductor, Hana Micron, VM and Tes — reached about 294.5 billion won.
Foreign investors were net sellers of the market as a whole but put money into select growth stocks. Pharma Research led foreign net purchases at 183.6 billion won, followed by Silicon2 at 159.6 billion won, Wonik IPS at 58.6 billion won, Rainbow Robotics at 49.9 billion won and HPSP at 47.2 billion won.
The return of retail money coincided with a sharp rally on the KOSDAQ. The index rose 15.91% to 834.29 at the end of last month from 719.76 at the end of July. The KOSPI gained just 3.40% over the same period, leaving the KOSDAQ ahead by 12.51 percentage points. On a monthly basis, that was the KOSDAQ's widest outperformance against the KOSPI since November 2017, when the gap reached 12.98 percentage points, or about eight years and nine months ago.
Analysts attribute the KOSDAQ's strength to a rotation of funds as investors eased their concentration in large-cap stocks, along with improving corporate earnings. Combined revenue at KOSDAQ-listed companies rose 23.6% from a year earlier to 216 trillion won in the first half of this year. Operating profit and net profit jumped 62.4% and 260.2%, respectively. The number of companies posting an operating profit rose to 1,033 this year from 978 a year earlier.
"Operating profit growth topped 100% in software, semiconductors and steel, and double-digit growth also appeared in energy, chemicals, retail, media and education," said Na Seung-doo, an analyst at SK Securities. "Because the KOSDAQ's earlier weakness was largely driven by fund flows, a further re-rating is possible if improving profits are joined by a recovery in investor interest."
