KOSPI Falls Below 3000 in One Day... Rising Concerns Over Liquidity Reduction

KOSPI Falls Amid Liquidity Reduction Concerns Despite Surpassing 3,000 the Previous Day
KOSDAQ Also Drops Over 1%... Weakness in Previously Strong NFT-Related Stocks

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The KOSPI fell below the 3,000 mark again after just one day. Concerns have emerged that liquidity, which had been boosting the stock market with hawkish remarks following the decision to extend Jerome Powell's term as Chairman of the U.S. Federal Reserve (Fed) for another four years, may be reduced.

As of 10:50 a.m. on the 23rd, the KOSPI stood at 3,001.07, down 0.40% (12.18 points) from the previous day. Earlier at 10:17 a.m., it dropped to 2,992.66, falling below the 3,000 level again. The previous day, the KOSPI closed at 3,013.25, up 1.42% (42.23 points) from the day before.

Concerns about liquidity reduction are being raised. On the 22nd (local time), U.S. President Joe Biden announced the decision to reappoint Chairman Powell. Additionally, Lael Brainard was nominated as Vice Chair of the Fed. Chairman Powell stated, "Inflation hits families who cannot afford essentials such as food, housing, and transportation," and added, "We will use our tools to prevent higher inflation from becoming entrenched."

The U.S. government also expressed concerns about inflation, signaling a move toward liquidity reduction. On the 22nd, U.S. Treasury Secretary Janet Yellen said, "We need to worry about inflation," adding, "It has reached a level that most Americans are concerned about." She further stated, "In the long term, the Fed must ensure that inflation does not become endemic," and "I believe Chairman Powell will fulfill that role."

The Fed is now more likely to take a hawkish stance. A hawk refers to those who support tightening monetary policy by raising benchmark interest rates to reduce liquidity when the economy shows signs of overheating. Seosangyoung, a researcher at Mirae Asset Securities, explained, "Chairman Powell's remarks do not indicate a significant change from recent Fed policies but rather suggest a hawkish approach to ease inflationary pressures," adding, "In the U.S. stock market, the dollar strengthened and government bond yields rose, leading to profit-taking mainly among large technology stocks."

Meanwhile, institutional investors showed strong selling pressure on the KOSPI, with net sales of 295 billion KRW. Individual and foreign investors were net buyers of 157.9 billion KRW and 130.5 billion KRW, respectively.

Sector indices showed mixed results. The paper and wood sector posted the largest gain of 2.61%, followed by non-metallic minerals (1.71%), steel and metals (1.22%), electric and gas utilities (1.12%), distribution (0.81%), and insurance (0.71%). On the downside were pharmaceuticals (-2.71%), services (-1.29%), transportation equipment (-1.02%), transportation and warehousing (-0.64%), and chemicals (-0.57%).

Almost all of the top 10 stocks by market capitalization declined. Samsung Biologics fell the most by 2.63%, followed by LG Chem (-2.61%), NAVER (-2.07%), Kia (-1.63%), Kakao (-1.56%), Hyundai Motor (-1.37%), Samsung SDI (-1.07%), and Samsung Electronics (-0.13%). Kakao Bank (0.47%) and SK Hynix (0.42%) rose.

At the same time, the KOSDAQ index was down 1.28% (13.18 points) from the previous day, standing at 1,019.13. It even dropped to 1,016.14 at 10:22 a.m.

Net selling by foreign and institutional investors led to the index decline. Foreigners and institutions sold a net 15.4 billion KRW and 111.5 billion KRW, respectively, while individuals bought a net 139.3 billion KRW.

Most sectors declined. Digital content fell the most by 4.27%, followed by distribution (-3.38%), IT software & services (-2.59%), publishing and media replication (-1.76%), semiconductors (-1.66%), and paper and wood (-1.38%). On the upside were textiles and apparel (1.43%), construction (1.09%), transportation (0.95%), telecommunications services (0.66%), and information devices (0.52%).

Almost all of the top 10 stocks by market capitalization fell. Notably, stocks related to non-fungible tokens (NFTs), which had been strong recently, dropped sharply. Wemade fell the most by 11.82%, followed by Celltrion Pharm (-6.99%), Celltrion Healthcare (-6.47%), SK Materials (-2.34%), Pearl Abyss (-2.29%), CJ ENM (-1.94%), HLB (-1.87%), L&F (-0.26%), and Kakao Games (-0.10%). EcoPro BM rose 0.80%.

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