SEOUL, August 14 (AJP) — South Korea's KOSPI has rebounded after a heavy crash in July. But the crazy roller-coaster ride has shifted to a duller plateau, with the main drivers quietly taking a back seat.
The benchmark index flirted with 7,000 Friday, rebounding more than 30 percent from its late-July intraday low of 5,262.77. Yet trading activity and cash on standby remain well below the levels seen during the market frenzy in June.
The ebb is evident.
Investor deposits — cash held in brokerage accounts but not yet invested — stood just below 100 trillion won this week, after falling to 97.93 trillion won on Aug. 11, the lowest level in about six months and sharply below the nearly 140 trillion won reached in June.
KOSPI turnover reached 26.73 trillion won Friday, around 40 percent of the 67.26 trillion won traded at the June 19 peak.
The more subdued mood is also visible among retail investors.
SK hynix closed 3.26 percent higher at 1,645,000 won Friday, but remained about 45 percent below its June 25 intraday peak of 2,987,000 won. Samsung Electronics also gained 1.87 percent higher at 273,000 won Friday after jumping 4.89 percent the previous day, but the stock remained about 27 percent below its June 19 intraday peak of 374,500 won.
The online stock community sounded more skeptical than euphoric.
“Is UBS covering its shorts?” one investor asked at 3:04 p.m., referring to trades routed through the Swiss investment bank's brokerage operation. Another pointed to “huge sell orders” appearing even as the stock advanced.
The comments offer a glimpse of how sentiment has changed since the earlier surge. The herd is no longer simply chasing prices. Investors are becoming more inquisitive and selective.
The bull market this time — although less spectacular than in June — has also become broader.
Friday's gains spread across the market, led by wireless telecommunications services, up 8.07 percent, automobiles at 5.94 percent, oil and gas at 5.74 percent and auto parts at 4.85 percent, according to Naver Finance data.
Of 155 auto-parts stocks, 96 advanced and 44 declined, while 56 of 92 food stocks gained. IT services rose 3.04 percent, with 64 stocks advancing against 50 decliners.
The gains may be broadening, but the speculative fervor that defined the June run-up has yet to return.
Less money chasing the rebound
The contrast is clearest in turnover.
KOSPI's average daily trading value reached 50.35 trillion won in June, when an artificial intelligence-driven rush into Samsung Electronics, SK hynix and leveraged products pushed activity to extraordinary levels.
It fell to 36.88 trillion won in July and declined further to 25.90 trillion won between Aug. 3 and 14, according to AJP calculations based on Korea Exchange data. That was down 48.6 percent from the June average and 29.8 percent from July.
Trading volume followed the same direction. An average 322.9 million shares changed hands per day between Aug. 3 and 14, compared with roughly 490 million in June.
The numbers mark a clear break from June, when rising prices were accompanied by heavy turnover, leverage and a swelling pool of cash available for investment.
Yoon Jae-hong, an analyst at Mirae Asset Securities, said the divergence reflects normalization after the extreme trading conditions earlier this summer rather than a wholesale retreat from the market.
“Normalization is underway, and volatility is also coming down,” he said. “Money is gradually moving into other ETFs as well.”
For now, however, investors appear reluctant to chase the rebound.
“It doesn't look like the market is in a phase where investors are actively buying,” Yoon said. “They appear to be staying on the sidelines and watching for now.”
He added that a further rise in share prices could eventually draw retail investors back into the market.
Money moves to the sidelines
Investor deposits offer another measure of how much the market has cooled.
They peaked at 139.69 trillion won on June 4, according to the Korea Financial Investment Association, before falling to 97.93 trillion won on Aug. 11 — a decline of nearly 42 trillion won, or about 30 percent.
Deposits edged back to 99.98 trillion won on Aug. 12 but remained nearly 40 trillion won below the June peak.
The decline does not necessarily mean investors have abandoned Korean equities. Some cash may already have been deployed or shifted elsewhere. Combined with weaker turnover, however, it points to a market where investors remain interested but are less willing to commit fresh money aggressively.
Risk appetite has not disappeared.
Margin-financing balances climbed back to 30.42 trillion won on Aug. 12 after falling to 27.40 trillion won on Aug. 4, suggesting that speculative appetite survived the July washout even as the broader pool of liquidity shrank.
Retail investors buy dips, sell rallies
That more cautious approach becomes clearer in the way individuals are trading.
Between Aug. 3 and 14, retail investors were net buyers of 2.14 trillion won of KOSPI-listed securities, while foreign investors bought a net 208 billion won and institutions sold 2.53 trillion won, according to KRX data.
But retail buying was concentrated heavily on the market's worst days.
Individuals bought 4.65 trillion won when the KOSPI plunged 5.12 percent on Aug. 3 and another 3.34 trillion won when it dropped 4.58 percent on Aug. 6.
When the market rallied, they sold.
Retail investors unloaded 3.19 trillion won as the KOSPI jumped 3.68 percent Wednesday and another 2.73 trillion won Thursday as the index gained 3.56 percent.
Foreign investors bought 2.12 trillion won Thursday, while institutions added 681.2 billion won. The pattern continued Friday as the KOSPI rose another 2.41 percent. Retail investors sold about 1.89 trillion won while foreigners bought roughly 3.05 trillion won.
Instead of chasing a rising market as they did during the earlier frenzy, individuals have increasingly bought sharp declines and sold into rebounds.
They have not left the market. They have become more tactical.
Thinner, but calmer
The pullback in speculative activity has also brought one potentially stabilizing effect: lower volatility.
The VKOSPI, which measures expected volatility in the KOSPI 200, stood at 55.26 Friday, sharply below its recent peak of 96.94, according to the KRX.
The decline has coincided with tighter rules on single-stock leveraged exchange-traded funds and a sharp contraction in trading of those products.
Yoon said the reduction in single-stock leveraged trading could make another bout of extreme volatility less likely.
“It will be difficult to see the kind of volatility we saw before,” he said. “Trading in single-stock leveraged products has fallen significantly, making the kind of large-scale rebalancing flows we saw earlier much less likely.”
With leveraged flows exerting less influence, the KOSPI may be less vulnerable to the mechanical buying and selling that magnified swings earlier this summer.
The calmer environment, however, does not settle the question of what will drive the index higher from here.
One view is that the chip-dominated phase of the rally is giving way to a broader advance as money rotates into telecom, autos, energy and other sectors.
Another is that the KOSPI's next sustained rise will still depend heavily on Samsung Electronics and SK hynix, whose outsized weight gives them enormous influence over the benchmark.
The two chipmakers were central to the KOSPI's extraordinary swings this year, with their combined market-cap weighting exceeding half of the index around the end of May.
Yoon said Samsung Electronics may have an edge over SK hynix in the next phase after giving investors a clearer message on shareholder returns at its latest earnings announcement.
“Samsung Electronics gave a clearer message on shareholder returns,” he said. “That could give it more room to rise than SK hynix.”
The question now is whether broader sector rotation can carry the KOSPI higher without recreating June's semiconductor frenzy, or whether another sustained advance will ultimately require its chip heavyweights to take the lead again.
For now, the evidence points less to investors abandoning Korean stocks than to the fading of the indiscriminate risk-taking that powered the first-half surge.
The party has not necessarily ended.
But this time, fewer people are on the floor — and those who remain are choosing their steps more carefully.
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