[Weekly Market Review] KOSPI Pressured by New Coronavirus Fears... Closes Down Over 5%

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] As fears over the spread of the novel coronavirus (COVID-19) intensified, the KOSPI fell more than 5% this week (January 28 to January 31). The KOSDAQ index also dropped over 6%. Amid growing anxiety about the novel coronavirus, investor sentiment appears to be increasingly frozen.

According to the Korea Exchange on the 1st, the KOSPI closed at 2,119.01 points, down 127.12 points (5.65%) from the previous week. After the Lunar New Year holiday, the KOSPI opened on the 28th of last month and ended the day down more than 3%, marking a gloomy start to the week.

Investor sentiment weakened as the Chinese government decided to extend the Lunar New Year holiday to prevent the spread of the novel coronavirus, signaling the seriousness of the situation. Although the World Health Organization (WHO) did not declare a state of emergency regarding the novel coronavirus, it issued a revised report raising the global risk level from 'moderate' to 'high,' further escalating concerns. By sector, stocks related to quarantine and vaccines surged significantly due to fears of the epidemic spreading, while duty-free and airline stocks weakened amid expectations of declining Chinese consumption and fewer travelers.

On the 29th, the index rebounded as buying demand emerged on the perception that the previous drop was excessive. This was interpreted as a rebound buying following the sharp decline the day before despite the COVID-19 situation. Individual and foreign investors led the index's rise by net buying mainly large-cap stocks. The index rebounded centered on Chinese-related consumer stocks, with LG Household & Health Care rising after recording a record annual sales of 7 trillion won last year.

On the 30th, concerns over the spread of the novel coronavirus continued, and the market closed down 1.71% compared to the previous day. The WHO reconvened its emergency committee on the 30th, heightening epidemic-related anxieties. Selling pressure centered on the IT sector intensified in the Taiwan stock market, which reopened after the Lunar New Year, leading to a simultaneous decline in the domestic IT sector. On the 31st, the market closed the week at 2,119.01, down 28.99 points (1.35%) from the previous trading day, weighed down by fears of the novel coronavirus.

During this week, foreign and institutional investors in the KOSPI market were net sellers of 1.5618 trillion won and 786.4 billion won, respectively. In contrast, individual investors were net buyers of 2.2606 trillion won.

The KOSDAQ index also ended at 642.48 points, down 43.09 points (6.28%) from the previous week. COVID-19-related theme stocks such as masks and vaccines stood out, and net selling by foreign investors centered on the IT sector expanded. Caution persisted amid the epidemic spread.

During this period, in the KOSDAQ market, similar to the KOSPI market, institutional and foreign investors led the index decline by net selling 172.8 billion won and 157.6 billion won, respectively. Individual investors were net buyers of 410.9 billion won.

This content was produced with the assistance of AI translation services.