USD/KRW Hits 11-Month High... KOSDAQ Plummets 2.86%

KOSDAQ Falls 2.86%
Foreigners 'Sell' as KOSPI Also Weakens
Won-Dollar Exchange Rate Soars, Reducing Stock Market Appeal

[Asia Economy Reporter Junho Hwang] On the 17th, the stock market closed again in a downward trend. The KOSPI fell for the eighth consecutive trading day, while the KOSDAQ dropped 2.86% in a single day. Although individual investors continued net buying, they could not overcome the net selling by institutional and foreign investors. The won-dollar exchange rate hit an 11-month high, causing foreign investors to withdraw and increasing downward pressure on the stock market.

On the 17th, the KOSPI closed at 3,143.09, down 28.20 points (0.89%) from the previous day’s close. The market showed mixed trends in the early session but widened its losses in the afternoon. Individuals supported the index with net purchases of 590.8 billion KRW. However, foreign investors sold 419.9 billion KRW and institutions sold 134.7 billion KRW, pushing the KOSPI downward.

Among all listed stocks, 786 stocks declined, while only 116 stocks rose. Among the top market capitalization stocks, Samsung Electronics closed at 74,200 KRW, down 0.27% from the previous session. The weakness in semiconductor stocks seen in the U.S. market was reflected in Samsung Electronics’ stock price. Samsung Electronics showed strong mixed trends in the early session but turned downward in the afternoon. SK Hynix closed at 101,500 KRW, unchanged from the previous day’s closing price.

Besides semiconductor stocks, NAVER closed down 1.83% at 428,500 KRW, while Kakao (2.74%), Samsung SDI (2.82%), and Hyundai Motor (1.84%) also ended the day with declines exceeding 1%.

On the other hand, Samsung Biologics recorded a new high ahead of starting production of Moderna mRNA COVID-19 vaccines at the end of this month. Samsung Biologics closed up 2.95% at 1,012,000 KRW. Earlier, Samsung Biologics announced in May that it had signed a contract for contract manufacturing (CMO) of Moderna’s COVID-19 mRNA vaccine. According to the contract, the company has begun technology transfer for the Moderna vaccine and is expected to start aseptic filling, labeling, and packaging of hundreds of millions of doses from the end of this month.

Kakao Bank also rose 14.10% to close at 87,400 KRW. This was attributed to strengthened investor sentiment following the announcement that its net profit for the first half of the year increased by 156.2% year-on-year to 115.9 billion KRW. The sectors to which these stocks belong also showed gains. Pharmaceuticals (2.36%), finance (1.41%), and textiles and apparel (0.22%) rose.

KOSDAQ down 2.86%

The KOSDAQ recorded its largest drop since February 24, falling 29.68 points (2.86%) to close at 1,011.10. Individuals net bought 191.5 billion KRW, but foreign and institutional investors net sold 76.4 billion KRW and 96.8 billion KRW respectively, resulting in a sharp decline. Among all stocks, 1,246 stocks fell.

Most of the top market capitalization stocks showed declines. L&F dropped 9.86%, Seegene fell 5.61%, and EcoPro BM and Alteogen declined 4.34% and 4.43%, respectively.

Daejun Kim, a researcher at Korea Investment & Securities, said, "The factors shaking the stock market include weak economic indicators from the G2, concerns about early tapering, and the Taliban’s takeover of Afghanistan." Meanwhile, Kyungmin Lee, a researcher at Daishin Securities, said, "There was an attempt at a rebound due to the short-term sharp decline in semiconductor stocks, but the market still showed an unstable trend," adding, "The rapid rise in the won-dollar exchange rate was the main reason."

On that day, the won-dollar exchange rate closed at 1,176.30, up 0.62% from the previous day, influenced by increased selling pressure on the Australian dollar and the weak yuan fixing. This is the highest level in 11 months.

Amin Kwon, a researcher at NH Investment & Securities, said, "The low domestic COVID-19 vaccination rate is exerting downward pressure on the won. However, as with the second (August) and third (December) COVID-19 waves last year, if the number of confirmed cases subsides, the won/dollar exchange rate is likely to come down."

He added, "Considering the trends of major risk indicators and other emerging market currencies, it is difficult to see the won’s isolated weakness as a leading sign of a trend in emerging market currencies. The 1,180 won level is the upper limit of the annual band we proposed, and the current level approaching it is judged to be an overshooting level reflecting the semiconductor market, domestic stock supply and demand, and the spread of COVID-19."

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