KOSPI Turns Down... Individuals Overwhelmed

[Image source=Yonhap News]

[Asia Economy Reporter Junho Hwang] On the 15th, the KOSPI started higher but soon turned to a downward trend. Despite net buying by individuals, foreign investors and institutions appeared overwhelmed by selling pressure. With U.S. Treasury yields rising to 1.63%, the burden of interest rates is increasing, leading to greater market volatility.

As of 9:08 AM, the KOSPI is down 0.45% (13.81 points) at 3040.58. While individuals show a net buying intention of 61.3 billion KRW, foreigners and institutions are showing net selling intentions of 31.8 billion KRW and 27.4 billion KRW respectively.

By sector, construction, transportation equipment, banking, and non-metallic minerals are showing gains. Among the top 10 market capitalization stocks, SK Hynix and LG Chem are on the rise. Samsung Electronics is down 0.60% at 82,300 KRW.

The KOSDAQ also turned downward as time passed, falling 0.26% to 923.84. Individuals are net buyers with 36.1 billion KRW, while foreigners and institutions are net sellers with 30 billion KRW and 6.3 billion KRW respectively. By sector, financials, non-metallics, food and tobacco, and transportation parts are showing gains. Among the top market capitalization stocks, Alteogen is on the rise.

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This shift to a decline appears to be the result of increased market pressure due to rising interest rates. Last week, the New York stock market showed weakness centered on tech stocks due to a sharp rise in U.S. Treasury yields. The market weakness had gradually lost momentum amid expectations of increased market funds following the implementation of U.S. economic stimulus measures.

Ahn Jaekyun, a macro researcher at Korea Investment & Securities, said, "Buying sentiment remains weak," adding, "We need to observe the Federal Reserve's response to the rise in long-term interest rates." The Fed will hold its Federal Open Market Committee (FOMC) meeting on the 16th-17th (local time).

Shin Eol, a researcher at SK Securities' Asset Strategy Team, said, "Domestic bond yields are expected to remain slightly weak," adding, "Volatility has increased after a broad-based upward shift in interest rate levels, and bearish factors still dominate." He further analyzed, "We are in a situation where mixed signals must be interpreted," and "Interest in the FOMC is also heightened."

Kwon Heejin, a macro researcher at Korea Investment & Securities, said, "Even if the Fed maintains a positive economic outlook, it is likely to keep the dot plot unchanged," adding, "Although the unemployment rate forecast has decreased, it still diverges from the full employment level in the mid-3% range." He noted that attempts to raise economic outlooks while lowering interest rates amid unstable inflation expectations could further stimulate inflation expectations, potentially undermining the Fed's policy effectiveness.

Meanwhile, in the foreign exchange market, the won/dollar exchange rate opened at 1,136.5 KRW per dollar, up 2.7 KRW from the previous trading day.

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