[Weekly Market Review] KOSPI Pressured by COVID-19 Fear... Rollercoaster Market Conditions

[Image source=Yonhap News]

[Asia Economy Reporter Koo Eun-mo] The number of confirmed cases of the novel coronavirus infection (COVID-19) both domestically and internationally has risen again, suppressing investor sentiment. This week, the KOSPI rose for four consecutive trading days from the beginning of the week as expectations for economic stimulus expanded following the U.S. Federal Reserve's (Fed) decision to cut interest rates. However, the index plunged sharply after four days due to a sudden surge in COVID-19 cases the previous day and profit-taking from the short-term rally, closing the week down.

According to the Korea Exchange on the 7th, the KOSPI recorded 2,040.22 points this week, up 53.21 points (2.67%) compared to the previous week. Reflecting the global stock market downturn caused by the COVID-19 crisis last week, the KOSPI fell to the 1,980 level but started the week on the 2nd with a rise amid expectations for global economic stimulus. Fed Chair Jerome Powell stated in an emergency announcement that they would use all available tools and measures to support the economy, which expanded expectations for a Fed rate cut, and the index rose as bargain hunting emerged following the continuous weakness.

On the 3rd, the index rose further, positively influenced by the strong U.S. stock market and President Moon Jae-in's remarks on COVID-19 support measures. However, the gains were pared as news emerged that the upcoming G7 finance ministers' meeting did not include additional fiscal policy measures. On the 4th, the index rose more than 2% again, supported by foreign investors' buying. Following the Fed's rate cut decision, the won-dollar exchange rate fell, improving investor sentiment, and foreign investors' net buying led the index higher.

On Thursday the 5th, the index rose influenced by the strong U.S. stock market, as Democratic presidential candidate Joe Biden, considered investor-friendly, was reported to be leading in the U.S. primary elections. Expectations for global policy coordination and a slight easing of domestic COVID-19 fears also had a positive effect. However, foreign investors' renewed net selling limited the index's gains.

Despite four consecutive days of gains, the KOSPI closed the week at 2,040.22, down 45.04 points (2.16%) from the previous trading day on the 6th, as the U.S. stock market failed to maintain its rebound and fell sharply. Concerns over COVID-19 spreading globally, including in the U.S., dampened investor sentiment.

This week in the securities market, foreign and institutional investors net sold 2.2176 trillion won and 1.0742 trillion won, respectively. In contrast, individual investors net bought 3.0712 trillion won.

The KOSDAQ index also closed at 642.72 points, up 31.99 points (5.23%) from the previous week. During this period, similar to the securities market, foreign and institutional investors net sold 377.4 billion won and 46.6 billion won, respectively, while individual investors net bought 482.3 billion won.

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