Foreign Investors Betting on a Rally
The KOSPI 200 futures market showed the first contango after the temporary short selling ban implemented in March this year. Under the circumstances, financial investment companies recorded a net purchase of approximately one trillion won and 478.2 billion won in KOSPI on June 3 and 4, respectively.
On June 3, foreign investors’ net purchase in the KOSPI 200 futures market reached 800 billion won at a certain point in time during the trading session. For the time being, trading is likely to take the form of foreign investors raising the value of futures by purchase and then securities companies increasing their spot purchase while selling futures. In other words, institutional investors’ program trading is likely to depend on foreign investors’ move in the futures market.
“Foreign investors’ large net purchase in the futures market is leading to an environment in which financial investors can increase their spot purchase,” said Eugene Investment & Securities research analyst Kim Dong-wan, adding, “Foreign investors bought futures at prices higher than theoretical prices and this means they are betting on a rally.”
June 12 is a quadruple witching day and, until then, financial investors’ move is predicted to be affected by whether foreign investors’ futures purchase will continue. This is because securities companies’ futures selling and spot purchase are unlikely without foreigners’ futures purchase, which is likely to determine the direction of large-cap stocks in particular.