On the last trading day before the Lunar New Year holiday, the KOSPI and KOSDAQ indices both closed higher on the 24th. The upward trend was driven by foreign investors purchasing both spot and futures in the Korean stock market. Individuals sold off their holdings ahead of the long holiday.
The KOSPI index closed at 2,536.8 that day, up 21.31 points (0.85%) from the previous day. The KOSDAQ index also finished up 4.73 points (0.65%) at 728.74. During the day, both indices saw reduced gains after the Bank of Japan (BOJ) held a monetary policy meeting and raised the key interest rate from 0.25% to 0.5%; however, since this was an already anticipated result, the market was not significantly shaken.
However, the temperature difference among investors was pronounced. Individuals net sold 380.1 billion won in the KOSPI market and 87.4 billion won in the KOSDAQ market. In contrast, foreign investors actively participated in buying, purchasing 230.8 billion won in the KOSPI market and 67.1 billion won in the KOSDAQ market, and showing a buying advantage in the futures market as well. Institutions also net bought 70.6 billion won in the KOSPI market and 9.9 billion won in the KOSDAQ market, contributing to the rise of the indices.
The decline in individual investor sentiment is interpreted as a result of a wait-and-see approach due to the upcoming long Lunar New Year holiday. The trading volume in the KOSDAQ market, where individual investors hold a significant proportion, was 6.2489 trillion won, the lowest since the beginning of the year. During the holiday period, major events are scheduled, including earnings announcements from big tech companies like Tesla, Meta, Microsoft, Apple, and Amazon, as well as the European Central Bank (ECB) monetary policy meeting.
Notably, on the Lunar New Year, the Federal Open Market Committee (FOMC) will convene in January. The market expects the Federal Reserve (Fed) to maintain the key interest rate at its current level (4.25-4.5%). Even individuals with neutral tendencies within the Fed concur with the hawkish views (favoring monetary tightening), emphasizing the adjustment of rate cut speeds.
Shin Eol, a researcher at Sangsangin Investment & Securities, noted, "As Jerome Powell, the chairman of the Federal Reserve, stated in a press conference last December, we will closely watch the policy announcements of the Trump administration and analyze their potential butterfly effects," adding, "This could lead to increased pressure on the Federal Reserve."
The issue is that President Trump has begun to pressure for rate cuts. In a virtual address at the World Economic Forum (WEF) that day, President Trump demanded a reduction in international oil prices from Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC), stating that he would press the Fed to lower interest rates immediately if oil prices dropped. While it did not immediately impact market interest rates, investors now need to consider the tension between Chairman Powell and President Trump.
Meanwhile, a significant influence of the Trump administration's new policies is continuing to affect the domestic stock market. That day, sectors that are expected to benefit from Trump's policies, such as power equipment, nuclear power, aerospace, and shipbuilding, showed remarkable strength. ILJIN Electric and HD Hyundai Electric reached new all-time highs. Hanwha Ocean exceeded market expectations for its fourth-quarter performance from last year (October-December), recording a double-digit stock price increase.
Among the top market capitalization stocks in the KOSPI market, the strength of bio stocks such as Samsung Biologics and Celltrion was notably pronounced. Hyundai Motor and Kia finished their stock transactions at lower prices compared to the previous day.
Among the top market capitalization stocks in the KOSDAQ market, the stock prices of Alteogen and LigaChem Biosciences rose. However, Ecopro BM, HLB, CLASSYS, and HUGEL showed weakness.