Institutional Buying Steps In... But Korean Stock Market Drops Further Amid US Interest Rate Rise Concerns

KOSPI Falls 1.4%... Drops Below 2940 for the First Time Since Early Year
KOSDAQ Slumps to 870s, Returning to Late November Levels
Institutions Net Buy Around 500 Billion KRW, but Foreigners and Individuals Sell Off Together
US Treasury Yield Rise Continues Impact... "Market Feels Burden from Sharp Increase"

[Asia Economy Reporter Minwoo Lee] Although institutional investors have turned to buying after a long time, the domestic stock market continues to struggle. It is analyzed that ongoing concerns over the sharp rise in U.S. Treasury yields are continuously weighing on the market.

As of 10:10 a.m. on the 9th, the KOSPI recorded 2,969.57, down 0.89% from the previous day. After starting slightly lower at 2,989.96, the decline has deepened. Around 9:59 a.m., it fell to 2,943.50, down 1.76% from the previous day. This was even lower than the opening price of 2,943.67 on January 5.

Despite net buying by institutional investors, the index is falling as foreigners and individuals continue net selling. Institutions net bought 498.7 billion KRW, while foreigners and individuals net sold 364.6 billion KRW and 119.2 billion KRW, respectively.

Unlike the early session when many sectors were rising, most sectors have turned downward. The non-metallic minerals sector had the largest drop at -4.77%. This was followed by paper & wood (-3.25%), chemicals (-3.06%), services (-2.85%), and medical precision (-2.74%). Only banks (1.28%), insurance (1.16%), textiles & apparel (1.06%), and finance (0.14%) rose.

At the same time, the KOSDAQ fell 1.93% from the previous day to 887.32. It also started slightly lower at 904.04 but broke below the 900 level shortly after opening. Around 9:58 a.m., it dropped to 877.99, down 2.96% from the previous day. This marked the first time since November 27 last year that it fell into the 870s.

Contrary to the KOSPI market, foreigners and individuals showed net buying on the KOSDAQ, while institutions were net sellers. Foreigners and individuals bought 41.6 billion KRW and 25.2 billion KRW respectively, but institutions sold 49.4 billion KRW.

Except for information technology (0.21%), all sectors declined. Many sectors fell more than 3%, including transportation (-3.48%), publishing & media replication (-3.41%), semiconductors (-3.36%), general electrical & electronics (-3.17%), and IT components (-3.14%).

It is analyzed that concerns over the rise in the U.S. 10-year Treasury yield have become a negative factor for the domestic stock market following the U.S. market. While the rise in yields itself is not necessarily negative, the rapid pace of increase has heightened the burden.

Lee Kyung-soo, head of the Meritz Securities Research Center, explained, "The overall capital market is showing adjustments due to environmental changes as the rise is happening too quickly for it to adapt," adding, "The burden is increasing because the pace of the rate hike is not slowing down." He further noted, "Next week’s U.S. Federal Reserve’s Federal Open Market Committee (FOMC) meeting is expected to be a turning point."

Earlier on the 8th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 0.97% from the previous day, while the tech-heavy Nasdaq index closed down 2.41%. The S&P 500 also fell 0.54% to close at 3,821.35. The rise in U.S. Treasury yields caused a clear sector divergence, resulting in a mixed market. The U.S. 10-year Treasury yield briefly rose to 1.606% during the session.

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