"First Step Toward Financial Balance".. Samsung Electronics Slides 1.19%

Impact of Base Rate Hike + Possibility of Additional Rate Increase
KOSPI Continues to Reverse Downward... Samsung Electronics Falls 1.91%
KOSDAQ, Game Stocks Show 'Polar Opposite' Price Movements

[Asia Economy Reporter Junho Hwang] The Korean stock market continues to struggle as the Bank of Korea signals a possible additional base rate hike.

As of 2:01 PM on the 26th, the KOSPI is trading at 3,123.70, down 23.11 points (0.73%) from the previous session. While individual investors are making efforts to boost the index with a net purchase of 413.2 billion KRW, foreign and institutional investors are net selling 356 billion KRW and 58.9 billion KRW respectively, pushing the index downward.

On this day, the market reversed downward after the base rate hike and has not recovered by the afternoon. Following the Bank of Korea's rate increase, Governor Lee Ju-yeol opened the door to the possibility of further hikes, significantly dampening investor sentiment.

In particular, foreign investors’ net selling has intensified. Foreign investors showed a net buying preference until 30 minutes before the Bank of Korea announced its rate hike decision, but then switched to net selling. They had focused on net selling over the past 10 trading days until the 23rd but shifted to net buying on the 24th.

The biggest factor behind the decline in investor sentiment is the possibility of additional rate hikes. At an online press conference immediately following the Monetary Policy Committee meeting, Governor Lee responded to a question about the need for further base rate hikes by saying, "The first step was taken due to the necessity to alleviate accumulated financial imbalances." He added, "Although the base rate was raised by 0.25 percentage points, the interest rate level remains accommodative. The real interest rate still shows a significant negative value, it is not at a level that restricts the real economy, and the base rate is still lower than the neutral rate." However, he explained, "The timing of additional adjustments depends on the impact of COVID-19 on the economy, policy changes by major countries such as the U.S. Federal Reserve, and so on. As always, we should neither rush nor delay."

Among KOSPI sectors, all except textiles and apparel (1.38%), transportation and warehousing (0.72%), transportation equipment (0.38%), finance (0.26%), and medical precision (0.20%) are showing declines. Among all listed stocks, 481 are down while 349 are up.

Among the top market capitalization stocks, Samsung Electronics stands out with a downward trend. It is trading at 74,800 KRW, down 1.19% from the previous day. Samsung Electronics started the day higher following a 0.8% rise in the Philadelphia Semiconductor Index and gains in U.S. semiconductor stocks the previous day, but reversed to a decline amid foreign selling. Meanwhile, SK Hynix maintains an upward trend, trading at 104,000 KRW, up 0.48%. Additionally, NAVER is down 1.97% at 422,000 KRW, Kakao is down 1.66% at 148,500 KRW, and Samsung Biologics is down 1.25% at 951,000 KRW.

On the 26th, the KOSPI opened at 3,151.30, up 4.49 points (0.14%) from the previous trading day, at the Hana Bank dealing room in Jung-gu, Seoul. On the same day, the won-dollar exchange rate opened at 1,165.0 won, down 3.1 won from the previous trading day. Photo by Kim Hyun-min kimhyun81@

The KOSDAQ is maintaining an upward trend supported by net buying from individual investors. As of now, the KOSDAQ is up 0.11% at 1,018.91. Individuals show a net purchase advantage of 197.8 billion KRW, sustaining the rise. Foreign and institutional investors are net selling 163.7 billion KRW and 19.1 billion KRW respectively.

By sector, the digital sector rose 7.93% compared to the previous closing price, driven by the stock price increase of Pearl Abyss. Pearl Abyss is trading at 85,100 KRW, up 21.51% from the previous close, fueled by expectations for its new metaverse title "Dokkaebi." Kakao Games also rose 11.59% to 85,700 KRW. In contrast, NCSoft, in the same gaming sector, is down 15.05% at 711,000 KRW.

The won-dollar exchange rate is currently at 1,170.80 KRW, influenced by a weaker yuan and a stronger dollar. Immediately after the rate hike announcement, the exchange rate fell to 1,163 KRW but later rebounded to the 1,170 KRW range.

Researcher Kyungmin Lee of Daishin Securities analyzed, "Looking at the reversal in the exchange rate, the impact of the rate hike can be considered limited. The widening weakness in the Chinese stock market and nearly 2% plunge in the Hong Kong market have also affected investor sentiment in the Asian region."

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