[Edaily Reporter Kim Kyung-eun] The securities industry has diagnosed that the concentration of demand in the KOSPI bull market since last year on the two stocks, #SamsungElectronics and #SKHynix, is not merely a result of simple investor sentiment, but rather the simultaneous interplay of earnings, supply and demand, and product structure.
Noh Dong-gil, an analyst at Shinhan Investment Securities, explained, “The rise in the KOSPI since its low point last April was not driven by a single entity,” adding, “Buying entities took turns playing their respective roles in a relay-like fashion, in the order of pension funds → foreign investors → retail investors → financial investment products.”
Institutions provided support at the bottom. From the April low through August, pension funds made net purchases of approximately 6 trillion won over four months, stabilizing the downside. Subsequently, as foreign capital flowed in, the market shifted to a bullish trend driven by rising prices. Foreign investors made cumulative net purchases of 21.9 trillion won from May to October, pricing in upward revisions to semiconductor earnings estimates.
Researcher Noh assessed, “This phase was the decisive moment that elevated the rationale for the Korean market’s rise from the previous ‘it’s cheap’ to ‘earnings are turning around.’”
This year, retail investors have accelerated the pace of the rally. From November of last year to the present, they have made cumulative net purchases of 63.9 trillion won, concentrating their funds not on the Korean market as a whole, but on the two stocks—#SamsungElectronics and #SKHynix—where earnings revaluation had already been confirmed. Looking at the combined supply and demand for these two stocks in May, foreign investors net sold 36.6 trillion won, while retail investors net bought 25.5 trillion won and financial investment firms net bought 12.9 trillion won.
Researcher Noh explained, “The similarity to the ‘Donghak Ants’ market of 2020 lies in the inflow of retail funds, but the difference lies in the timing of entry and the targets of purchase,” adding, “Retail investors exhibit the characteristics of ‘verification-following’ funds, entering the market after observing the price paths created by pension funds and foreign investors and following proven earnings.”
Researcher Noh analyzed that the current concentration has a self-reinforcing structure. He explained, “When new KOSPI 200 exchange-traded funds (ETFs) are launched, they automatically include these two stocks based on market capitalization weighting, while semiconductor ETFs and the top two AI semiconductor products more directly use these two stocks as their core underlying assets.” He added, “Regardless of the path through which funds flow into Korean equity products, the structure ultimately leads to these two stocks.”
Researcher Noh suggested acknowledging the concentration rather than trying to avoid it. He stated, “While maintaining the top two semiconductor stocks as the core of the portfolio, it is safer to utilize periods of price divergence for new purchases rather than chasing the market.”
He identified profitless concentration as a key risk signal. Researcher Noh added, “If, amid a slowdown in semiconductor earnings upgrades, trading volume for leveraged single-stock positions continues to rise while redemptions from the KOSPI 200 persist and the underperformance of indices excluding the top two deepens, then such concentration would be a sign of fatigue rather than a trend.”