The combined daily average buying of Samsung Electronics (005930.KS) and SK hynix (000660.KS) has approached half of total KOSPI buying this month. As market funds concentrate in the two stocks, which account for more than half of the KOSPI's market capitalization, analysts say a "volatile market" in which the broader index rises and falls in step with these stocks has deepened.
According to the Korea Exchange (KRX) on Thursday, the daily average buying of Samsung Electronics and SK hynix from the start of June through that day totaled 22.0997 trillion won. That equals 45.6% of the daily average KOSPI buying of 50.041 trillion won over the same period. The share of Samsung Electronics and SK hynix in daily average KOSPI buying rose 3.5 percentage points from 42.1% the previous month. Across all market participants, buying value is identical to selling value, and trading value is the sum of the two.
On a daily basis, the buying share of Samsung Electronics and SK hynix exceeded 50% on five of the 14 trading days this month. In particular, on Thursday the buying share of the two stocks reached 53.6%, the highest level.
The daily average buying share of Samsung Electronics and SK hynix stood at just 20.5% as of January last year. The figure fell to 14.7% in May of that year but began rising from June (14.8%). In other words, the share of the two stocks in KOSPI buying has increased 3.03-fold in one year.
The figure topped the 30% mark for the first time in November last year (31.2%), held in the 20% to 30% range, then surged into the 40% range last month. The buying sentiment for the two stocks was maximized as Samsung Electronics and SK hynix shares rose 43.8% and 81.4%, respectively, last month, driving the KOSPI to quickly break through the 7,000 and 8,000 marks.
As this buying concentration deepened, Samsung Electronics and SK hynix even appeared to absorb buying demand from other stocks this month. The daily average buying of stocks excluding Samsung Electronics and SK hynix was 27.192 trillion won this month, down 6.4% from last month (29.064 trillion won). Even though daily average KOSPI buying this month swelled 5.1 times compared with January last year (9.618 trillion won), investors in stocks other than Samsung Electronics and SK hynix found it difficult to feel the warmth of the fund flows. In the financial investment industry, analysts say the concentration of funds into the two stocks has become more pronounced since the launch of single-stock leverage products based on Samsung Electronics and SK hynix last month.
The daily average buying share of Samsung Electronics and SK hynix in the KOSPI by financial investment institutions, which reflect retail investors' exchange-traded fund (ETF) trading, was 56.7% this month. That was up 4.2 percentage points from the daily average buying share of 52.5% last month, tallied just before the launch of the single-stock leverage products. On May 27, when the single-stock leverage products were launched, the buying share accounted for 73%, and the previous day it set a record high of 73.8%.
With market supply and demand concentrated in Samsung Electronics and SK hynix, the market inevitably moves in line with the share prices of the two stocks. In particular, as the two stocks account for 54.6% of the KOSPI's total market capitalization, sharp swings in the share prices of Samsung Electronics and SK hynix increase market volatility.
Thursday's market conditions were a prime example. The KOSPI opened at 9,288.89, up 2.48% from the previous trading day, and broke through 9,385.59 intraday to set a new high. SK hynix rose at one point to an all-time high of 2,891,000 won (7.61%), surpassing 2,000 trillion won in market capitalization, while Samsung Electronics climbed to 374,500 won (3.31%) to renew its record high, with the two large semiconductor stocks leading the index higher. However, Samsung Electronics closed down 2.34% and SK hynix narrowed its gain to 2.94%, sending the index down 0.13% to finish at 9,052.42. The index also fell to as low as 8,831.72 intraday. The difference between the intraday high and low reached 553.87 points. The combined market capitalization of domestic stock markets (KOSPI and KOSDAQ) broke through 8,160.0956 trillion won intraday for the first time ever, before recording 7,945.095 trillion won at the close due to the giveback of gains.
With optimistic forecasts for semiconductor earnings still gaining traction, there are concerns that a stock market decline will further fuel the concentration into Samsung Electronics and SK hynix. Han Ji-young, a researcher at Kiwoom Securities, said, "The dominance of semiconductors and the extreme concentration into a few sectors are the fundamental backdrop behind the market's decline today." She added, "As a result, demand to switch into KOSPI leading stocks emerged again across not only the KOSPI but the KOSDAQ market as a whole."
