Foreign Investor Sentiment Freezes... KOSDAQ Falls Below 900, KOSPI Records Largest Drop This Year

On the 25th, the KOSPI opened at 2,786.41, down 5.59 points (0.20%) 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 1,196.0 won, down 0.1 won from the previous trading day. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Ji Yeon-jin] The KOSDAQ index fell below the 900 mark on the 29th. Although the U.S. stock market rebounded the previous day, raising expectations for a strong domestic market, heavy selling by foreigners from the early session led to a sharp decline. With growing concerns about tightening ahead of the U.S. Federal Open Market Committee (FOMC) meeting starting that day, and the geopolitical crisis in Ukraine dampening investor sentiment, the index was pulled down. The KOSPI index, which fell below 2800 the previous day, recorded its largest drop this year, sliding to the low 2700s.

The KOSDAQ index closed at 889.44, down 25.96 points (2.84%) from the previous day. This was the first time in over 10 months that the index traded below 900 since it recorded 890.17 on March 10 last year. The KOSDAQ had shown an upward trend fueled by massive liquidity due to the COVID-19 pandemic, reaching an intraday high of 1062.03 on August 6 last year. However, it faced corrections amid concerns over interest rate hikes due to global inflation, breaking the 'Cheonsdak' (1000-point) level earlier this year and falling below 900 within 10 trading days.

Individual investors, who showed buying interest early in the session, turned to net selling of 93.7 billion KRW, driving the index down, while foreigners also recorded net sales of 44.5 billion KRW. Institutions were net buyers with 120.2 billion KRW on the day.

The KOSPI index closed at 2720.39, down 71.62 points (2.56%). This was the largest drop so far this year. Although individuals defended the index by net buying 586.4 billion KRW, foreigners and institutions increased the decline by net selling 469.9 billion KRW and 171.5 billion KRW, respectively.

Among the top market capitalization stocks in the KOSPI, Samsung SDI recorded the largest drop, falling more than 6%, followed by LG Chem, which plunged 4.32%. This is interpreted as funds flowing out from existing secondary battery stocks ahead of LG Energy Solution's listing on the 27th of this month. Samsung Electronics (-2.00%), SK Hynix (-1.26%), NAVER (-2.59%), Kakao (-2.56%), and Kia (-3.04%) also declined.

Lee Kyung-min, a researcher at Daishin Securities, pointed out, "While emerging markets generally showed weakness, the Korean market faced additional supply-demand variables ahead of LG Energy Solution's listing. As foreigners continued selling, the won-dollar exchange rate temporarily rose to 1199 KRW, showing a vicious cycle where the weakening won leads to more selling."

Among the top market capitalization stocks in the KOSDAQ, all except EcoPro BM (-1.47%) plunged sharply. Celltrion Healthcare (-5.30%) and Seegene (-5.10%) recorded drops exceeding 5%, while L&F (-4.99%), Wemade (-4.50%), and HLB (-4.74%) also fell significantly.

Lee Jin-woo, head of investment strategy at Meritz Securities, said, "Although the U.S. reduced intraday losses yesterday, the perception of a bottom has not spread yet, and the catalyst for a reversal remains unstable, so the decline may widen or narrow. While the index is moving based on supply-demand factors amid risk-averse sentiment, the larger drops in financial and cyclical stocks that had held up well until now indicate that investor sentiment has deteriorated further compared to yesterday."

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