The Night Before, Markets Take One Breath Called ‘Relief’

That day’s domestic session’s starting point wasn’t Korea but the U.S. On the previous trading day (local time), Wall Street saw tech stocks rebound with major indices jointly rising. Especially Nasdaq and S&P 500 rose meaningfully, with sessions where anxieties that “have AI valuations run too far ahead?” briefly eased. AI hardware representative stocks like Nvidia showed strength to lift sentiment, with bounce-backs also emerging from software sides after plunges. ‘Risk-on’ signals like Oracle surges also appeared together.

But it wasn’t quite to atmospheres of “okay, now comfortably buy again.” Because market gazes had moved to ’next hurdles.’ That week had core data like employment and inflation indicators scheduled, with some schedules pushed back due to government shutdown fallout to heighten variables. “Ultimately when and how much the Federal Reserve will move rates” became market frames once again, so rebounds were rebounds but closer to ‘conditional rebounds.’

The important point here is one. Rebounds on such days easily become “sessions testing how far big money enters” rather than “bull markets where everything rises together.” And that ‘big money’ reads mostly as foreign supply-demand in domestic sessions.

As Sessions Opened, KOSPI Saves Face While KOSDAQ Slips

Seoul sessions drew very typical ‘strong open, weak close’ pictures. KOSPI started strongly receiving U.S.-originated tailwinds in early sessions (opening around 5,350), rose as high as the 5,363 line, then returned most gains in afternoons to close flat at 5,301.69. As KOSPI had surged over 4% the previous day, timing naturally emerged for profit-taking saying “good was good, profits are profits.”

Supply-demand was clearer. In KOSPI spot, foreigners and institutions net bought while individuals net sold. By numbers, foreigners net bought about ₩140 billion range, institutions about ₩560 billion range, individuals net sold about ₩870 billion range. Summarizing, the structure is “individuals sold inventory which foreigners and institutions received.”

Conversely KOSDAQ ended ‘opening was rise, conclusion was fall.’ Opening was rise (1,132 line) and went as high as 1,141 line intraday, but turned to decline mid-morning, hit lows (1,109 line), and ultimately closed at 1,115.20. Change rate basis -1.10%. And actors who actually recorded net buys in this market were essentially only individuals (individual net buy about ₩320 billion range, foreigners/institutions jointly net sold). Supply-demand where titles feel like “KOSDAQ only individuals bought.”

The reason this scene is more interesting is that the question “U.S. tech stocks were good so why is KOSDAQ weaker” naturally follows. Answers branch two ways. One is ’that day’s sector/stock composition,’ and the other is ‘market structure.’

Adding on, exchange rates also moved in directions scratching investors’ nerves. Won/dollar exchange rates closed slightly down (won strength) at ₩1,459.1. While generally favorable signals for indices, small movements like this alone make foreign capital hard to turn around at once. Rather it more likely heightened waiting sentiments that “if U.S. data emerging this week changes dollar flows, exchange rates can shake greatly too.”

The Reason for Becoming ‘Inferior to Big Brother,’ KOSDAQ Naturally Struggles for Deep Foreign Entry

Comparing KOSPI and KOSDAQ as “hyung (big brother-large caps) and dongsaeng (little brother-growth stocks)” isn’t emotional but starts from structure. If KOSPI as Korea Exchange’s main board is a market centered on large/mature companies, KOSDAQ was created to support venture/small/growth companies’ fundraising. Explanations also repeat in official guides that listing requirements are more relaxed than KOSPI.

This structure directly translates to investor composition. One study organizes that KOSDAQ-listed companies (even compared to similarly-sized KOSPI company groups) have much smaller asset/equity scales, higher individual proportions in trading, with institutional proportions appearing very low. Looking at tables, in 2010s sections individual proportions are overwhelmingly higher on KOSDAQ sides (roughly 90% range), with institutions not even reaching single digits. Foreign proportions are also lower compared to KOSPI.

From foreign perspectives, this isn’t ’taste’ problems but ‘operation’ problems. Big money needs wide roads both when entering and exiting. In sections where liquidity is shallow (or concentrated only in specific stocks), information asymmetry is large, or volatility is large, foreign capital can’t enter deeply. Indeed, research results also exist that foreigners’ trading itself in KOSDAQ is observed far lower than KOSPI.

So on days like February 11 “when markets briefly tense ahead of indicators,” KOSPI does ‘minimal face-saving (flat territory)’ while KOSDAQ often emerges with ‘declining while enduring only on individual bargain-hunting.’ That day’s supply-demand was exactly that picture. KOSPI was received by foreigners/institutions, while KOSDAQ was sold by foreigners/institutions with individuals alone receiving.

A Day of Sector Rotation, Awkward Balance Created by “Divided Buying” Instead of “One Hit”

The reason KOSPI didn’t completely break that day wasn’t because “semiconductors kept running.” Rather, representative semiconductor large caps Samsung Electronics and SK hynix turned weak intraday to block index tops.

Nevertheless, indices endured because ‘sector rotation’ existed where funds didn’t cling only to one sector but dispersed. Financials were strong, with transportation/distribution/food & beverage and other consumption-related sectors also riding positive flows. Representatively, financial large caps like KB Financial were strong, with interpretations attached that government distribution deregulation easing (pursuing large mart early morning delivery allowance) expectations operated as catalysts enlivening distribution/retail sentiment.

By sector, ‘strangely strong places’ also jumped out. Like reports that paper/wood sectors rose markedly, it was a day when markets didn’t move just “only AI, only semiconductors.” Conversely, defensive sectors like electricity/gas being pushed back was also a point. This is closer to signals that big money moved while adjusting risk “finding places likely to rise” rather than simply “this sector is good/bad.”

KOSDAQ was more disadvantaged here. Many secondary battery/bio/equipment stocks in KOSDAQ market cap leaders jointly showed weakness, with essentially only individuals as ‘big hands’ to receive inventory foreigners/institutions threw. So once indices started being pushed in mornings, recovery elasticity dropped.

What Switches Turn Foreigners’ Hearts

Talk of “turn foreigners’ hearts” sounds cool, but in reality it’s closer to fairly dry checklists. Based on February 11 markets, switches broadly divide into short-term and mid-long term.

Short-term switches are data and timetables. That week had U.S. employment/inflation/consumption-related indicator announcements scheduled, which were materials that could reset market expectations for interest rate paths (i.e., Fed’s next step). Moreover, some indicators had schedules adjusted due to shutdown fallout to heighten uncertainties. In such environments, foreign capital more easily stays in ’large/liquidity markets’ like KOSPI rather than ‘high beta (rises well and falls well) markets’ like KOSDAQ.

Mid-long term switches are ‘structure.’ For KOSDAQ to become attractive markets to foreigners requires going beyond levels where a few stocks rise well to trust that “here is institutionally okay to stay long.” At this point, symbolic significance is large for the Financial Services Commission’s announced ‘KOSDAQ Trust and Innovation Improvement Measures.’ The gist is clear. Directions to strengthen KOSDAQ operational independence and competitiveness, adjust listing review/delisting structures, create conditions easy for institutional investors to enter, and strengthen investor protection. Announcements premise diagnoses that KOSDAQ trust recovery wasn’t sufficient after IT bubbles, with problems like delayed exits and institutional investment avoidance remaining.

In other words, “foreigners’ hearts” aren’t emotions but result combinations of variables like systems, liquidity, exchange rates, interest rates, and data schedules. February 11 was a day when those variables simultaneously tilted toward “let’s watch a bit more,” so KOSDAQ had only individuals remaining while KOSPI at least had foreigners/institutions save face.

Conclusion, That Day Was a Day of ‘Order Realignment’ Not ‘Rise’ or ‘Fall’

Condensing February 11 sessions into one sentence: “Jumped up riding U.S.-originated rebounds, but money repositioned ahead of holidays and indicators.”

KOSPI created flat territory as foreigners/institutions received, while KOSDAQ declined as foreigners/institutions exited with individuals alone enduring. This difference is closer to differences in “who can endure longer market structure-wise” rather than “who was smarter.”

So ’to turn foreigners’ hearts’ requires (short-term) risk levels shaken by U.S. indicators and exchange rates to come down, and (mid-long term) KOSDAQ to build trust/exit/disclosure/protection systems where institutions and long-term capital can enter. February 11 was a day fairly honestly showing what expressions markets wear when those conditions aren’t yet fully satisfied.

Reference List

• February 11 KOSPI/KOSDAQ index flows (open/high/close), investor-type net buys, exchange rate close
• Previous day (local) U.S. stock rebound nature (tech stock-led, data waiting, major stock movements)
• Context of core indicator schedules like U.S. employment/CPI delayed by shutdown impacts
• Official information on Seol (Korean New Year) holiday schedules
• KOSPI/KOSDAQ structural differences (market purposes, listing requirement intensity differences, long-term investor composition characteristics)
• Policy directions for improving KOSDAQ trust and institutional capital inflow conditions