US Fed's Tapering Signal Dampens Investor Sentiment... Sharp Decline in Both KOSPI and KOSDAQ

KOSDAQ Falls Over 2%... Even the 1000 Level Broken

[Asia Economy Reporter Minwoo Lee] The KOSPI and KOSDAQ are experiencing sharp declines of around 1% and 2%, respectively. This appears to be due to weakened investor sentiment following the U.S. Federal Reserve's (Fed) indication of tapering (reduction of asset purchases) scheduled for September. With foreign and institutional investors increasing their selling pressure, nearly all sectors are unable to avoid losses.

As of 2:48 PM on the 19th, the KOSPI stood at 3112.03, down 1.48% from the previous day. After a slightly weak start at 3140.01, it briefly rebounded to the 3158 level in the morning but soon widened its losses. Around 1:19 PM, it dropped to 3104.93, threatening the 3100 level.

In the KOSPI market, foreign and institutional investors continued to sell simultaneously. They net sold 271.8 billion KRW and 355.9 billion KRW worth of shares, respectively. Meanwhile, individual investors net bought 685.2 billion KRW worth of shares.

At the same time, the KOSDAQ fell 2.28% to 997.75. Following a similar pattern to the KOSPI, it started slightly weak, rebounded to 1022.77 at 10:25 AM, but then reversed to a decline. The losses widened, and by 1:19 PM, it had dropped to 993.21. This marks the first time in over two months since June 17 that the KOSDAQ fell below the 1000 mark during trading hours.

In the KOSDAQ market as well, foreign and institutional investors sold simultaneously, offloading 166 billion KRW and 117.8 billion KRW worth of shares, respectively. Notably, this is the first time since the 26th of last month that foreign investors have net sold more than 150 billion KRW in the KOSDAQ market. Individual investors alone net bought 297.1 billion KRW.

Overall investor sentiment has weakened following the Fed's tapering indication. On the 18th (local time), the Fed released the minutes of the Federal Open Market Committee (FOMC), signaling the implementation of tapering this year. It is expected that the schedule for implementation will be announced either at the Jackson Hole Conference starting on the 26th or at the FOMC meeting on the 22nd of next month. Consequently, on the New York Stock Exchange (NYSE) that day, the three major U.S. indices?the Dow Jones Industrial Average, S&P 500, and Nasdaq?each fell by about 1%.

Park Kwangnam, head of the Digital Research Team at Mirae Asset Securities, explained, "The Fed's tapering indication dampened investor sentiment, and the institutional shift to selling also added pressure. The rebound in the dollar-won exchange rate, the visibility of tapering, foreign selling, and the weakening of risk asset preference have all contributed to a significant depreciation of the Korean won."

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