'KOSPI Closes Lower by 0.96% Amid "Wait-and-See" Mood Due to US-China Tensions'

[Asia Economy Reporter Junho Hwang] On the 23rd, the KOSPI closed lower. The market started higher as the market interest rates slightly declined the previous day, but market participants lacked confidence in the rates. In particular, as the cooling tensions between China and the US or the EU gradually intensified, the cautious stance grew stronger. Furthermore, with speeches scheduled by Federal Reserve (Fed) Chair Jerome Powell and Treasury Secretary Janet Yellen, as well as a government bond auction taking place that day, analysts suggest that a cautious mood prevailed.

KOSPI Closes Lower

On the 23rd, as the KOSPI index started higher buoyed by the positive momentum in the U.S. stock market, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mo Honam munonam@

On that day, the KOSPI closed at 3,006.21, down 29.35 points, a 0.96% decrease from the previous closing price. Individuals were net buyers with 1.0173 trillion KRW, but foreigners and institutions were net sellers of 476.3 billion KRW and 540.3 billion KRW respectively, weighing down the market. There were 652 declining stocks, 215 advancing stocks, and 46 stocks that remained unchanged on the KOSPI.

By sector, cyclical stocks showed notable gains. Construction (1.26%), steel and metals (1.13%), paper and wood (1.10%), food and beverages (0.46%), and transportation and warehousing (0.25%) all rose. In particular, the stock prices related to the People Power Party’s Seoul mayoral candidate, Oh Se-hoon, surged significantly following his nomination.

The top 10 market capitalization stocks all declined. Samsung Electronics closed at 81,800 KRW, down 0.24%. SK Hynix (-2.17%), NAVER (-2.65%), and LG Chem (-3.73%) experienced larger drops.

The KOSDAQ also failed to escape the downward trend. It closed at 946.84, down 8.54 points or 0.89% from the previous day. Individuals were net buyers with 107.7 billion KRW, but foreigners and institutions were net sellers of 48.4 billion KRW and 33.2 billion KRW respectively, unable to prevent the index’s decline. There were 306 advancing stocks, 1,032 declining stocks, and 69 unchanged stocks on the KOSDAQ.

By sector, the miscellaneous manufacturing sector, including Enzychem Lifesciences, rose 1.90%. The stock price jumped on news that Lotte Group is acquiring Enzychem Lifesciences to enter the bio industry. Other sectors that rose included textiles and apparel (1.34%), non-metallic minerals (1.01%), transportation (0.33%), pharmaceuticals (0.24%), and distribution (0.07%). Conversely, financials (-3.48%), computer services (-3.45%), transportation parts (-3.37%), and software (-2.46%) sectors declined sharply.

Interest Rates Fell, But Let's Watch a Bit More

Experts viewed the market on this day as being heavily influenced by a wait-and-see stance on interest rates. The US 10-year Treasury yield, which recently has acted as a fear gauge for the market, fell slightly, leading to a higher market open, but the market declined as confidence was not secured.

The previous day, the US 10-year Treasury yield closed at 1.6973%, down 1.69%. The news that the central bank governor pushing for a rate hike in Turkey was dismissed caused a sharp drop in the Turkish lira, which in turn pushed US Treasury prices up and yields down. Additionally, as frictions between China and the US or EU expanded, investment sentiment for safe-haven assets increased.

Seosangyoung, an investment strategy researcher at Kiwoom Securities, said, "The market declined due to sell-offs triggered by US-China and EU-China frictions, sluggish commodity futures markets, and increased volatility in some exchange rates such as the New Zealand dollar," adding, "Market participants are refraining from aggressive moves, focusing on the scheduled US Treasury auction and speeches by Fed Chair Powell and other Fed officials today."

The KRW-USD exchange rate also reflected reduced risk asset preference, falling to 1,125 KRW per dollar early in the session before closing at 1,129 KRW, up 0.12%.

Lee Kyung-min, a strategy researcher at Daishin Securities, said, "The KOSPI faces the challenge of overcoming supply-demand burdens amid external uncertainties until the end of this month," and added, "In the short term, it is expected that the KOSPI will confirm whether it can secure support at the 3,020 level and maintain a strategy of increasing exposure by utilizing volatility expansion."

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