More stocks fall despite KOSPI rally amid chip-sector concentration
Seoul, June 7
More stocks listed on the benchmark Korea Composite Stock Price Index have declined than advanced in recent weeks despite the market rally, the bourse operator said on Sunday, suggesting that investment is increasingly concentrated in a handful of heavyweight semiconductor stocks.
According to the Korea Exchange (KRX), an average of 210 KOSPI-listed stocks advanced, while 586 declined and the remainder were unchanged during the two-week period from May 26 through Friday.
The trend came even as major market heavyweights posted strong gains, reports Yonhap news agency.
Shares of top-cap Samsung Electronics Co. and its chipmaking rival SK hynix Inc. rose 13.72 percent and 14.32 percent, respectively, over the cited period.
On May 27, the KOSPI jumped 2.55 percent, but only 72 stocks advanced. In comparison, 713 stocks rose on May 22, when the KOSPI posted a modest 0.41 percent gain, according to KRX.
When the KOSPI closed 1.84 percent lower Thursday, 400 stocks advanced, outnumbering 389 decliners.
"The current market concentration cannot be explained solely by investor sentiment," said Noh Dong-gil, an analyst at Shinhan Securities. "Samsung Electronics and SK hynix have evolved beyond market leaders to become common underlying assets across a wide range of financial products."
The divergence has fuelled expectations that investors will continue to concentrate on a handful of top-cap chip leaders that are driving the KOSPI rally.
Meanwhile, South Korean retail investors sold over 1 trillion won ($641 billion) worth of overseas stocks in the first week of June, data showed on Sunday, suggesting their possible return to the local stock market amid record-breaking gains led by semiconductor shares.
Local retailers sold a net $793.67 million worth of foreign stocks from Monday through Friday, continuing their net selling streak that began in April, according to the data from the Korea Securities Depository (KSD).
The figure far surpassed the net selling of $469 million in April and approached the $939.77 million recorded in May.
If the trend continues through the end of this month, the net selling streak will extend to a third consecutive month for the first time since the April-July period of 2023.
— IANS
Reader Comments
This is exactly what happens when FOMO grips the market. Samsung and SK hynix are brilliant companies, but putting all eggs in one basket? That's not investing, that's gambling. Indian investors should learn from this—Nifty 50 can be equally deceptive sometimes.
The analyst Noh Dong-gil makes a solid point—these chip stocks are now underlying assets for multiple financial products. But when everyone rushes to the same boat, the market becomes fragile. Indian mutual funds also tend to cluster in HDFC, Reliance, TCS... deja vu.
This is a textbook bubble warning sign. Korean investors selling foreign stocks to jump into local chip stocks? That's the behavior we saw before the dot-com crash. India's semiconductor ambitions are exciting, but this kind of concentration isn't sustainable.
I'm worried about small investors getting burned. On May 27, only 72 stocks advanced while KOSPI jumped 2.55%—that's a mirage of a rally. In India too, we see Sensex soaring but mid-caps and small-caps bleeding. Need better financial literacy.
Very insightful data from KRX. The fact that 713 stocks rose on a modest 0.41% gain day vs only 72 on a 2.55% surge day shows this rally is hollow. Indian markets have similar patterns during FII-driven rallies. Be careful, people! 📉
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