KOSPI Closes Down Over 1% Amid Concerns of Early Interest Rate Hike

Foreign Investor Supply Instability Amid Dollar Strength
Impact of Early Rate Hike Possibility and US Default Concerns

[Asia Economy Reporter Minji Lee] The KOSPI closed the session down over 1%. Concerns that U.S. interest rate hikes could accelerate weighed on the index.

On the 17th, the KOSPI ended the day at 2,962.42, down 1.16% (34.79 points) from the previous trading day. The KOSPI opened at 3,004.02, up 0.23% (6.81 points) from the previous day, but widened its losses during the session and closed lower. Looking at investor trends, foreigners bought stocks worth 76.7 billion KRW, and individuals purchased stocks worth 768.8 billion KRW. Institutions were the sole sellers, offloading stocks worth 886.1 billion KRW.

The sharp rise in the won-dollar exchange rate caused instability in foreign investors' supply and demand. According to the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,182.5 KRW, up 2.6 KRW, but rose to around 1,186 KRW during the session, prompting foreigners to show net selling at one point. Kyungmin Lee, a researcher at Daishin Securities, explained, "Despite inflationary pressures, U.S. retail sales in October rose compared to the previous month, and industrial production also increased month-on-month, leading to improved economic indicators that drove dollar strength."

Concerns that the timing of monetary policy normalization could be brought forward also weighed on the market. James Bullard, President of the Federal Reserve Bank of St. Louis, argued that "the Federal Open Market Committee (FOMC) should move in a more hawkish direction to properly manage inflation risks," and mentioned that options to simultaneously reduce asset purchases and raise the benchmark interest rate are possible.

Additionally, a 20-year U.S. Treasury auction is scheduled, and if this auction also underperforms following the poor 30-year auction, it is expected to stimulate interest rate increases and expand financial market volatility. Researcher Kyungmin Lee added, "U.S. Treasury Secretary Yellen pointed out that if the debt ceiling is not raised by December 15, there is a risk of a U.S. default, and the debt ceiling negotiation issue is resurfacing as a risk factor."

By sector in the KOSPI market, all sectors except banks (0.44%) and medical precision (0.39%) showed declines. Pharmaceuticals (-3.09%), textiles and apparel (-3.02%), and insurance (-2.80%) saw the largest drops. Among the top market capitalization stocks, all declined except Samsung SDI (0.26%) and Hyundai Motor (0.24%). Samsung Electronics fell 0.84% to 70,700 KRW, while SK Hynix (-1.34%), NAVER (-1.11%), Samsung Biologics (-2.52%), Kakao (-1.96%), LG Chem (-1.03%), and Kia (-0.24%) closed lower.

The KOSDAQ index closed at 1,031.26, down 0.41% (4.20 points) from the previous day. The index opened at 1,039.36, up 0.38% (3.90 points), but soon turned downward. Looking at investor trends, foreigners alone sold stocks worth 99.2 billion KRW, while individuals and institutions bought stocks worth 126.4 billion KRW and 18.4 billion KRW, respectively.

Among the top market capitalization stocks, Pearl Abyss (1.81%), L&F (2.81%), and SK Materials (1.35%) showed gains, while Celltrion Healthcare (-4.64%), Kakao Games (-0.74%), EcoPro BM (-0.12%), and Celltrion Pharm (-5.53%) declined.

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