Large-scale share buybacks by Samsung Electronics (005930.KS) and SK hynix (000660.KS) have served as a floor for supply and demand in South Korea's stock market, but they were not enough to absorb heavy selling by foreign and institutional investors. The KOSPI fell nearly 4% to the 6,500 level as top market-capitalization stocks declined across the board.
The KOSPI closed at 6,562.72 on the 2nd, down 273.08 points, or 3.99%, from the previous session, according to the Korea Exchange. The KOSDAQ ended at 803.98, down 17.27 points, or 2.10%. On the main board, simultaneous selling by foreign and institutional investors dragged the index lower. Foreign investors sold a net 1.9096 trillion won ($1.3 billion) and institutions a net 2.0438 trillion won ($1.4 billion), while retail investors bought a net 2.3028 trillion won ($1.6 billion).
Other corporate entities, which have emerged as a major buyer in the KOSPI following recent buybacks by Samsung Electronics and SK hynix, bought a net 1.6505 trillion won ($1.1 billion) but could not stop the index from falling. The category has posted net purchases of more than 1 trillion won for 10 consecutive sessions since the 20th of last month, a pattern attributed to buyback volumes from Samsung Electronics and SK hynix being recorded under other corporate entities.
Despite that buying, most of the largest stocks by market value fell. Samsung Electronics closed at 250,500 won, down 4.02% from the previous session, and SK hynix ended at 1.613 million won, down 4.73%. SK Square (402340.KS) fell 7.97%, Hyundai Motor (005380.KS) 5.62%, LG Energy Solution (373220.KS) 5.31% and Samsung C&T (028260.KS) 4.48%.
Buying by other corporate entities has recently absorbed selling from foreign and other investors, supporting the lower end of the market. With Samsung Electronics and SK hynix acquiring their own shares on a scale of 15 trillion won and 40 trillion won respectively, an unusual pattern took hold in which other corporate entities absorbed shares even as foreign, institutional and retail investors sold at the same time. Sessions such as this one, however, exposed the limits of defending the index with buybacks alone when selling pressure intensifies, led by foreign investors.
"U.S. stocks fell for three straight sessions and geopolitical risks persisted, while pressure from high interest rates and high oil prices continued, strengthening risk-averse sentiment in the domestic market," said Lim Jung-eun, an analyst at KB Securities. "Large caps extended their correction on the KOSPI, and losses widened on the KOSDAQ as well, centered on semiconductor materials, parts and equipment stocks."
