From a KOSPI roller coaster to a semiconductor correction... Domestic Public Offering Funds lose 73 trillion won in a month [Aftermath of the leverage measures]

The size of the domestic Public Offering Fund market fell by nearly 73 trillion won in just one month. As the domestic stock market underwent a correction led by semiconductor shares, the Public Offering Fund market also shrank sharply.
According to the financial investment industry on the 20th, the total net assets of domestic Public Offering Funds stood at 590.2281 trillion won as of the 16th, down 72.6796 trillion won, or 10.96%, from a month earlier.
Net assets first topped 600 trillion won on May 6 and then surged to a record 673.6414 trillion won on June 18. But they have been falling rapidly this month. On the 13th, they dropped to 580.0155 trillion won, slipping below 600 trillion won for the first time in two and a half months. Total net assets refer to the value of assets held in a fund, such as stocks and bonds. They rise when inflows increase and when the value of underlying assets goes up.
The biggest factor was the contraction in equity funds, which account for more than one-third of domestic Public Offering Funds. As of the 16th, net assets in domestic equity Public Offering Funds stood at 210.3635 trillion won, down 55.5152 trillion won, or 20.88%, in a month.
The domestic stock market, which had been on a steep upward trend, has been undergoing a sharp correction this month. Investor sentiment weakened as concerns over semiconductor valuations, geopolitical risks and monetary tightening converged. So far this month, the KOSPI (Korea Composite Stock Price Index) has fallen 23.13%, while the KOSDAQ (Korean Securities Dealers Automated Quotations) has dropped 18.18%. On the day, the KOSPI fell 4.46% and the KOSDAQ 5.33%. As the indices plunged intraday, a temporary suspension of program sell orders, known as a sell-side sidecar, was also triggered on the Korea Exchange Main Board and the KOSDAQ market.
Still, the consensus in the securities industry is that the market has entered oversold territory, given the solid fundamentals. Cho Byung-hyun, a researcher at Daol Investment & Securities, said, "Many divergence indicators and technical signals have entered oversold territory, but volatility remains high and repeated declines have made the market extremely uneasy." He added, "Even if we assume that some forecasts of weaker earnings paths become reality, valuations are already in an excessively low range."
The size of bond funds is also shrinking, reflecting the impact of interest rate hikes and other factors. As of the 16th, net assets in domestic bond Public Offering Funds stood at 77.485 trillion won, down 3.5126 trillion won, or 4.34%, from the previous month. Hana Securities maintained its investment view on government bonds at "reduce." Park Joon-woo, a researcher at Hana Securities, said, "Given the rebound in oil prices and the recovery in the economy, it will be difficult to ease the risks of monetary tightening." He added, "Since the Bank of Korea's Monetary Policy Board emphasized demand-side inflationary pressures more strongly last week, the degree of tightening is likely to be quite strong."
[email protected] Seo Min-ji Reporter