A common feature that's shared between the Korean Stock Exchange and the Tokyo Stock Exchange is the amount of corporations listed with both boosting well over 2000 listings that remains an impressive feat when considering a similar amount of companies listed on the New York Stock Exchange. The extent of companies coming to this form of capital market to raise funds does give a feel of a capitalistic nature around the economy which proves true for all three of the nation's stock exchanges mentioned.
The two most distinct companies that stand out for many would be Samsung and Hyundai. Many would be familiar with products bearing the logos of these brands however what is not always known is the fact that consumer electronics and cars aren't the only products that are manufactured by the respective companies. Steel mills, chemicals, construction and a variety of other products are sold through these global conglomerates.
Politics in the country is stable however tension is often experienced with neighbours North Korea who hold an opposite political system to South Korea. Because of these tensions, the Korean Peninsula has become a hive of high profile nation debate with the US and Japan siding with the South and China protecting the North. There never seems to be a concrete outcome between both countries which places a lot of attention on the antagonistic attacks on one another fuelling speculation of an impending war, heightening risk levels.
Let's get to the charts;
Monthly
A strong uptrend that's been in place since the early 2000's that produced enough strength to hold steady during the Financial Crisis. Strangely the rally that set off after the low's were registered in 2008/09 was able to break through previous highs but has since been uninspiring in it's quest to seek higher grounds. This makes for a worrying bullish outlook with pressure starting to build from the longer term players who haven't seen positive returns in a number of years. Their anxiety might be the seed that grows disinterest in keeping their hands steady.
There is a uptrend in place so it'll be interesting to see whether it will be tested anytime soon. If that were to happen we'd need to see a breakdown below the support of 1800 with the move expected to be quick and volatile. However we shouldn't ignore the resistance of 2200 which has only been tested twice whereas support being pushed a lot more times suggesting that buyers aren't willing to let go just yet.
Weekly
I've included the chart above to show that there are some charts that simply can't be read which ever way you try to look at them. This is the weekly of the KOSPI and does in it's own chaotic way sum up the price action we saw on the monthly. What it also says is that if we're confused by what we seeing, what must traders or investors be thinking that actively follow this index be thinking?
In saying this I thought that because this index represents the performance of each share listed on the Korean Stock Exchange there should be another index that mimics the general movement. The KOSPI 200 is an index that tracks the returns of the 200 biggest stocks listed, so here we have an index that possesses fewer stock but because it's the biggest companies more than likely it constitutes the most of the KOSPI movement anyway.
A much tidier chart compared to the previous one now allows as to assess whereabouts in the range stock valuation sit currently. From what I see I'd say we are hovering around the middle of the range which doesn't produce a great edge if considering a trade. Usually you'd be looking to the extremes of the support and resistance to place a trade so that you have a clear indication of the direction. When in the middle, price can go in either direction.
The price has knocked up against the resistance in the region of 270 and 275 a number of times but failed to surpass that level indicating that sellers have dominated the buyers whereas the support of 220 might be slightly more flimsy, an important note to take when going forward.
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