Kosdaq Index Volatility: Divergent Strategies of Individual and Foreign Investors
Recently, the KODEX Kosdaq150 Leverage and TIGER Kosdaq150 Leverage ETFs have seen significant interest from individual investors. These investors have responded by purchasing 19 billion KRW and 200 million KRW respectively, indicating an optimistic view towards leverage. Conversely, foreign investors have been selling the same ETFs while purchasing the bearish KODEX Kosdaq150 Futures Inverse ETF to the tune of 6.6 billion KRW, betting on a decline of the Kosdaq index.
While the Kosdaq index has exhibited a steady upward trend, the extent of this rise remains limited. The market's volatility has been exacerbated by factors such as the U.S. presidential election results, which have seemingly delayed the expected interest rate cuts and weakened the battery sector, influenced by Trump’s ascendancy. With fourth-quarter earnings projections for Kosdaq companies revised downwards by around 10%, there is diverging sentiment on the long-term growth prospects of the index.
Even with the announcement of abolishing the financial investment income tax, the Kosdaq's rise was not as significant as anticipated. This contrasts with the Kospi, which rose by 1.8%, benefiting from the tax repeal. Trump’s influence has negatively impacted the battery sector on the Kosdaq, further limiting its growth. According to experts, Korea's sluggish economic conditions and concerns over the diminishing profitability of battery companies are expected to be major factors constraining Kosdaq's future growth.
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