The KOSPI opened lower on weakness in U.S. equities but closed higher, reclaiming the 6,800 level. Retail, foreign and institutional investors were all net sellers, yet Samsung Electronics (005930) and SK hynix (000660), the market's two largest stocks by market capitalization, defended their share prices through buybacks and helped push the index higher, analysts said.
The KOSPI ended at 6,835.8 on the 1st, up 15.78 points, or 0.23%, from the previous session, according to the Korea Exchange. The index opened 0.52% lower and extended its intraday loss to as much as 1.28% before gaining momentum in the afternoon to finish in positive territory. Samsung Electronics and SK hynix, which also opened lower, closed the regular session up 0.38% and 1.14%, respectively.
What stands out is that the KOSPI advanced even though all three main investor groups — retail, foreign and institutional — were net sellers. Including exchange-traded funds and other products, retail investors sold a net 440 billion won on the KOSPI. Foreign and institutional investors sold a net 850 billion won and 373.4 billion won, respectively.
Absorbing that selling were other corporations, which bought a net 1.67 trillion won. Other corporations refers to corporate entities excluding institutional investors.
Market participants attribute the heavy net buying by other corporations to share buybacks at Samsung Electronics and SK hynix. The two companies purchased 2 million and 650,000 of their own shares on the open market, respectively.
Net buying by other corporations topped 1 trillion won starting on the 20th of last month, when SK hynix began its buyback, and has run at a daily 1.5 trillion to 1.6 trillion won for seven consecutive sessions since the 24th, when Samsung Electronics started its own program.
"The buybacks by the two big chipmakers, Samsung Electronics and SK hynix, which began last month, are acting as a safety valve against market volatility," said Shin Seung-jin, head of the investment information team at Samsung Securities (016360) Research Center. "But shareholder return policies can support a floor for share prices without guaranteeing gains, so we expect a gradual rise rather than the kind of sharp rally seen in the first half."
The KOSDAQ, meanwhile, had no buyer to absorb combined selling by foreign and institutional investors and closed at 821.25, down 13.04 points, or 1.56%. Among the KOSDAQ's largest stocks, pharmaceutical and biotech names fell alongside major secondary battery shares. Alteogen (196170) lost 2.11%, EcoPro (086520) fell 4.49%, EcoPro BM (247540) dropped 3.81%, HLB (028300) declined 4.35% and Peptron (087010) tumbled 9.66%.
