Liquidity Shrinks... KOSPI Shows Slight Decline Amid US Tapering Concerns

KOSDAQ Falls Back to 980 Level... Foreigners and Institutions Focused on Selling Pressure

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[Asia Economy Reporter Gong Byung-sun] Concerns over liquidity reduction that began in the United States and profit-taking flows in technology stocks have also affected the domestic stock market. The KOSPI showed a slight decline after partially recovering from early losses.

On the 4th, the KOSPI closed at 3,240.08, down 0.23% (7.35 points) from the previous trading day. The index rebounded from early losses to reach 3,246.19 at 1:56 p.m., but then fell again.

Concerns about asset purchase tapering in the U.S. stock market and increased profit-taking centered on technology stocks acted as negative factors for the domestic market. On the 2nd (local time), the U.S. Federal Reserve (Fed) hinted at selling corporate bonds and exchange-traded funds (ETFs). Considering that Fed Chair Jerome Powell insisted on holding corporate bonds until maturity, this is an unusual move. As concerns over liquidity reduction spread, it appears to have negatively impacted not only the U.S. stock market but also the domestic market.

The increased desire for profit-taking in technology stocks was also a negative factor. Although the Biden administration abandoned plans to raise the corporate tax rate from the existing 21% to 28%, it is expected to continue proposing a minimum tax rate of 15%. As a result, the stock prices of technology companies Micron and Qualcomm fell by 2.74% and 5.7%, respectively. Seo Sang-young, a researcher at Mirae Asset Securities, explained, “The possibility of tax increases on large technology companies has increased,” adding, “Especially, the issue of poor corporate earnings has triggered a wider decline in technology stocks.”

Institutions sold intensively. On that day, institutions sold stocks worth 658.2 billion KRW. Individuals and foreigners bought stocks worth 470.9 billion KRW and 162 billion KRW, respectively.

Many sector indices showed weakness. The telecommunications sector had the largest decline at 2.33%. This was followed by transportation and warehousing (-1.55%), distribution (-1.28%), textiles and apparel (-1.12%), and services (-1.09%). On the upside were machinery (2.79%), transportation equipment (2.01%), banking (1.38%), pharmaceuticals (0.70%), and steel and metals (0.48%).

The top 10 stocks by market capitalization showed mixed results. Kia had the largest gain at 2.30%, followed by Samsung Biologics (1.94%), Hyundai Motor (1.26%), Celltrion (0.19%), and Samsung SDI (0.16%). Meanwhile, Kakao (-1.98%), NAVER (-1.38%), Samsung Electronics (-0.72%), SK Hynix (-0.39%), and LG Chem (-0.37%) declined.

The KOSDAQ closed at 987.58, down 0.04% (0.36 points) from the previous trading day. It fell to 983.02 at 10:40 a.m. but then narrowed the losses.

Sales by foreigners and institutions led to the index decline. Foreigners and institutions net sold 87.6 billion KRW and 69.8 billion KRW, respectively. Individuals net bought 191.8 billion KRW.

Many sectors declined. The entertainment and culture sector had the largest drop at 2.49%, followed by finance (-1.33%), semiconductors (-1.10%), broadcasting services (-1.08%), and telecommunications and broadcasting services (-0.97%). On the upside were computer services (1.88%), transportation equipment and parts (1.20%), publishing and media reproduction (0.85%), construction (0.80%), and general electrical and electronics (0.65%).

Similarly, the top 10 stocks by market capitalization showed mixed results. Seegene had the largest decline at 2.64%, followed by Alteogen (-2.24%), CJ ENM (-1.96%), SK Materials (-1.45%), Pearl Abyss (-1.37%), and HLB (-0.89%). Celltrion Healthcare (1.36%), Kakao Games (1.08%), EcoPro BM (0.39%), and Celltrion Pharm (0.29%) rose.

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