US Fed Turning Hawkish... KOSPI Closes Below 3000

Jerome Powell Fed Chair "We Will Use Our Tools Before Inflation Becomes Entrenched"
Metaverse and Non-Fungible Token (NFT) Related Stocks Slump... KOSDAQ Closes Down 1.80%

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The KOSPI closed below the 3000 mark due to institutional selling pressure. The liquidity concerns highlighted by the Federal Reserve's (Fed) hawkish stance are interpreted as having negatively impacted the stock market. A hawkish stance refers to a tendency to support tightening measures such as raising the benchmark interest rate when signs of economic overheating appear.

On the 23rd, the KOSPI closed at 2997.33, down 0.53% (15.92 points) from the previous day. It even fell to 2992.14 at 11:39 a.m. that day.

The Fed's indication of liquidity reduction acted as a negative factor for the domestic stock market. On the 22nd (local time), U.S. President Joe Biden announced at a White House press conference that Jerome Powell would be reappointed as Fed Chair. Powell also stated at the press conference, "We will use our tools before higher inflation becomes entrenched."

In fact, the expected inflation for November reached 2.7%, the highest since January 2017. The possibility of an interest rate hike at the Bank of Korea's Monetary Policy Committee meeting on the 25th is also a burdensome factor.

Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, "We confirmed the Fed's hawkish stance on inflation pressure," adding, "Cyclical sectors benefiting from inflation and interest rate hikes, such as banks, steel, and non-ferrous metals, rose, but metaverse-related stocks saw sell-offs."

Institutional selling also influenced the index decline. Institutions net sold 695.4 billion KRW. Individuals and foreigners net bought 379.7 billion KRW and 282 billion KRW, respectively.

Many sectors showed weakness. Pharmaceuticals had the largest decline at 2.58%. This was followed by services (-2.02%), transportation and warehousing (-1.46%), transportation equipment (-1.28%), and chemicals (-1.06%). On the upside were paper and wood (1.92%), steel and metals (1.67%), non-metallic minerals (1.42%), banks (1.19%), and distribution (0.83%).

Almost all of the top 10 stocks by market capitalization fell. LG Chem had the largest drop at 3.27%, followed by Kakao (-3.11%), NAVER (-2.44%), Samsung Biologics (-2.40%), Kia (-2.33%), Hyundai Motor (-1.60%), Samsung SDI (-1.21%), and SK Hynix (-0.42%). Kakao Bank (1.41%) and Samsung Electronics (0.53%) rose.

The KOSDAQ closed at 1013.72, down 1.80% (18.59 points) from the previous day. It fell further to 1012.95 at 3:18 p.m., widening the decline.

Institutional selling led to the index drop. Institutions net sold 191.7 billion KRW. Individuals and foreigners net bought 154.2 billion KRW and 54.6 billion KRW, respectively.

Most sectors declined. Digital content had the largest drop at 6.08%, followed by IT software & services (-3.88%), publishing and media replication (-3.63%), distribution (-2.92%), and finance (-2.27%). On the upside were textiles and apparel (1.96%), construction (0.62%), telecommunications equipment (0.13%), and telecommunications services (0.09%).

All of the top 10 stocks by market capitalization fell. Wemade had the largest decline at 16.09%. Recently strong-performing non-fungible token (NFT)-related stocks generally showed weak trends. This was followed by Celltrion Pharm (-5.90%), Celltrion Healthcare (-5.58%), Pearl Abyss (-2.52%), CJ ENM (-2.46%), SK Materials (-2.04%), L&F (-1.72%), HLB (-0.87%), EcoPro BM (-0.74%), and Kakao Games (-0.62%).

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