[Weekly Market Review] KOSPI Drops to 2270 Level, Focus on Whether It Breaks Down Further

[Asia Economy Reporter Oh Ju-yeon] Despite the sharp decline in the U.S. stock market earlier this year, the relatively resilient domestic stock market experienced a significant drop in the fourth week of September (21st?25th). The KOSPI, which had risen close to the 2450 level, retreated to the 2270 level, falling below 2300, while the KOSDAQ index is barely holding the 800 level. There is an assessment that the net buying power of individual investors, who had been pouring nearly 1 trillion won daily to support the market whenever the index fell, has weakened compared to before. Additionally, there is an analysis that whether the 2270 level can be supported before the Chuseok holiday is crucial.

According to the Korea Exchange on the 26th, the KOSPI fluctuation rate for the fourth week of September was 4.63%. The KOSPI, which closed at 2389.39 on the 21st, dropped to 2278.79 on the 25th. Compared to the opening price on the 21st (2412.44), this represents a 5.54% decline.

This increased volatility was due to concerns over the U.S. presidential election and the possibility of renewed lockdowns in Europe caused by COVID-19. The U.S. stock market, which hit an all-time high this year, saw the S&P 500 and Nasdaq fall about 10% from their peaks. Technology stocks, which had led the bull market, began to undergo corrections, spreading to other sectors.

On the 25th, the KOSPI index opened at 2295.16, up 0.99% (22.49 points) from the previous trading day, as dealers were working in the Hana Bank dealing room in Jung-gu, Seoul. On the same day, the KOSDAQ index rose 1.36% (11 points) to 817.95, and the won-dollar exchange rate started at 1169.5 won, down 3.2 won from the previous trading day. Photo by Kim Hyun-min kimhyun81@

There is a forecast that the global stock market correction will continue for the time being. Investors' attention is focused on how long and how far this correction will last. Especially next week, with the long Chuseok holiday, market volatility may increase, heightening anxiety. It is a period sensitive to negative news rather than positive, so it is analyzed that it is important to see whether the KOSPI can hold the 2270 level before the Chuseok holiday.

Lee Kyung-min, a researcher at Daishin Securities, said, "The KOSPI 2270 level is a turning point to gauge both time and price adjustments," adding, "It is the previous low point, and if this index level is breached downward, further price adjustments will be inevitable."

Lee also said, "In that case, it is necessary to delay the buying timing further. By sector, it is expected to be reasonable to maintain or even increase weights in internet and secondary battery sectors if prices fall further, while it would be effective to take a lighter position in semiconductor and automobile sectors, which have shown recent strength."

Ha In-hwan, a researcher at KB Securities, explained, "In a situation where the stock market has risen due to liquidity, a decline in expected inflation (rise in real short-term interest rates) is an important variable affecting asset price declines," adding, "When such changes occur, caution is needed for stock market corrections, and a time adjustment is expected until early to mid-next month."

Meanwhile, there is an analysis that the net buying power of individuals has weakened compared to before. Until early September, individuals defended the index decline by pouring over 1 trillion won daily when the index fell. However, toward the end of the month, this aggressive buying momentum has slowed down.

When the index fell 1.17% from 2353.80 to 2326.17 on August 31, individuals net bought 1.5 trillion won worth of stocks, and when the index dropped 1.15% from near the 2400 level to 2368.25 on September 4, they purchased 1.28 trillion won worth.

However, on the 22nd, when the KOSPI fell 2.38%, net buying was 991.3 billion won, and on the 24th, when it dropped 2.59%, net buying was only 328.9 billion won. The total net buying for the week was 1.7 trillion won.

Seo Jung-hoon, a researcher at Samsung Securities, said, "Although the KOSPI showed a steep decline in a short period, considering that the rebound since March was 68%, it can be seen as a reasonable level." He added, "Since the surrounding funds for the stock market are abundant, attempts at bargain buying are expected to follow soon."

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