Korean shares may be bottoming out, 2,500 to be first Kospi resistance this week

[Provided by Yonhap]

After returning to the spring 2000 low levels from pandemic outbreak, South Korean shares may finally be bottoming out on broad recoveries in global markets and active bargain-hunting by domestic and foreign institutions from relief from the latest U.S. inflation data.

The “Boom & Shock Index,” jointly developed by Maeil Business Newspaper and South Korean artificial intelligence-enabled fintech startup Qraft Technologies, sharply retreated to 13 from 36 for U.S. equities and to 20 from 41 for Korean equities.

The Boom & Shock Index, released every week, is an indicator of institutional asset management for the following week. When the index falls between 0-10, investors could take cue to up stock investment, and vice versa if the index hovers from 51 to 100.

The U.S. consumer price index last week rose 7.7 percent from a year ago, the lowest since January, raising expectations for a peak up in inflation to persuade the U.S. central bank to slow the tightening pace.

As the Nasdaq gained 8.1 percent, the S&P 500 5.9 percent, and the Dow Jones 4.15 percent last week, the Kospi added 4.7 percent, and the Kosdaq 4.39 percent.

Institutional investors shifted to long position, joining foreigners who have rapidly been snapping up chip stocks such as Samsung Electronics and SK hynix.

Net purchases of Kospi and Kosdaq shares by institutions and foreigners as of Friday topped 2 trillion won ($1.52 billion).

“The 2,500 may be the first resistance level this week,” said Oh Ki-seok, head of the Hong Kong office of Qraft Technologies.

Analysts however are yet unsure whether the market trend has reversed.

The Kospi fell 0.12 percent to trade at 2,480.26 in the morning trade Monday, and the Kosdaq down 0.13 percent at 730.28.