Recently, as the Korean stock market soared, the number of designations for short-term overheating stocks also surged.
According to the Korea Exchange on the 29th, as of the 26th of this month, there are 30 designated short-term overheating stocks in the domestic stock market. This is a noticeable increase compared to March's 11, April's 22, and May's 17.
The exchange includes a stock in the category of short-term overheating stocks if its closing price rises by more than 30% compared to the average closing price over the previous 40 trading days, and if its transaction volume and intraday volatility expand sharply. If signs of overheating are repeated after the designation notice, leading to a final designation, trading will only be possible with single-price transactions every 30 minutes for three trading days. The designation period for short-term overheating stocks may be extended.
The sharp increase in short-term overheating stocks since June is largely interpreted as having significant influence from expectations for stock market stimulation following the launch of the new government. The KOSPI index recorded positive revenue for 11 weeks, except for one week (May 19-23), starting from the third week of April to the recent period. In particular, it showed a sharp rise from the end of May, just before the launch of the new government. The increase rate over the past month (May 26 to June 27) is 17.9%.
As the index continues its high-altitude march, the number of stocks whose current prices exceed the target prices set by securities firms has increased. According to financial information provider FnGuide, as of the 26th of this month, there are a total of 43 stocks exceeding the average target price set by at least three securities firms.
On the 24th, the KOSPI index surpassed the 3100 mark for the first time in 3 years and 9 months since September 27, 2021 (3133.64). However, over the following three days (25-27), foreign investors showed signs of realizing profits by net selling more than 1.5 trillion won. Experts believe that the influx of funds due to the new government's policy momentum and profit realization movements will continue for the time being.
Na Jeong-hwan, a researcher at NH Investment & Securities, noted, "Although some profit-taking pressure emerged as the KOSPI index entered the 3000s in a short period, this is considered a healthy adjustment," and added, "In a situation where funds surrounding the stock market are abundant, it will lead to a sector and stock rally with policy momentum."