KOSPI Turns Down ... "Growing Concerns Over Supply Chain Disruption Due to COVID Spread in India"

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Both the KOSPI and KOSDAQ indices turned downward as foreigners and institutions sold off domestic stocks. It is analyzed that concerns over the potential disruption of global supply chains due to the spread of COVID-19 in Asian countries such as India influenced the market.

As of 10:35 AM on the 17th, the KOSPI stood at 3,149.61, down 0.09% (3.71 points) from the previous trading day. The KOSPI opened at 3,163.21, up 0.31% (9.89 points) from the previous day. At this time, foreigners and institutions sold stocks worth 209.2 billion KRW and 177 billion KRW, respectively. Individuals alone purchased stocks worth 383.6 billion KRW.

Sangyoung Seo, a researcher at Mirae Asset Securities, said, “Although the market started higher supported by the strong U.S. stock market, volatility increased due to growing concerns over supply chain disruptions caused by the spread of COVID-19 in Asian countries including Taiwan. Today’s market will be influenced by changes in the Taiwanese stock market, China’s real economy indicators, and the spread of COVID-19 in India.”

Looking at the top market capitalization stocks, Samsung Electronics traded at 79,700 KRW, down 0.5% from the previous day. Samsung Biologics (-6.4%), Hyundai Motor (-1.09%), Samsung SDI (-0.16%), and Kia (-1.21%) also showed declines.

At the same time, the KOSDAQ index stood at 968.06, up 0.14% (1.34 points) from the previous day. The KOSDAQ opened at 968.02, up 0.13% (1.30 points). Regarding investor trends, foreigners and institutions sold stocks worth 70.4 billion KRW and 23.2 billion KRW, respectively, while individuals alone bought stocks worth 97.4 billion KRW.

Among the top market capitalization stocks, Celltrion Healthcare (1.67%), Celltrion Pharm (2.87%), Kakao Games (0.40%), and HL Biopharma (0.63%) rose, while EcoPro BM (-1%) and SK Materials (-0.09%) declined.

"Inflation Shock Easing, Foreign Inflows Not Yet"

Amid increased volatility in global stock markets due to inflation concerns, there is growing weight to the view that the Federal Reserve (Fed) will not accelerate the normalization of monetary policy. Since the U.S. Consumer Price Index (CPI) for April surged due to factors such as used cars and hotels, it is judged that the Fed’s stance will not easily change based on a single inflation pressure.

Euntaek Lee, a researcher at KB Securities, said, “The Fed’s words have a huge impact on stock prices, so they will not pull out the tightening card due to a single inflation event,” adding, “Considering that the real short-term interest rate still remains low, it is too early to worry about a tightening shock.” Starting with Fed Vice Chair Clarida this week, speeches by Fed officials and the release of the Federal Open Market Committee (FOMC) minutes are scheduled, and it is expected that they will generally emphasize limiting concerns about inflationary pressures and maintaining accommodative monetary policy.

Meanwhile, foreign inflows into the domestic stock market are expected to take more time. Historically, when U.S. growth stocks faltered, foreigners tended to have a net buying trend in the domestic stock market, but the current market situation is ambiguous between growth and value stocks. Jinmyung Kim, a researcher at Hanwha Investment & Securities, said, “Looking at the U.S. stock market, growth stocks are trying to overcome regulatory risks, while value stocks are moving in line with inflation. When there is no clear trend, it is difficult to expect foreigners to have a net buying of Korean stocks.”

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