Stock Market Pulled Down by 'LG Ensol Black Hole'... With Corona Effect Ends Slightly Lower

KOSPI narrows losses in the afternoon, closes down 0.19%
LG Ensol alone rises over 8% amid large-cap declines

[Asia Economy Reporter Ji Yeon-jin] South Korea's two major stock markets closed slightly lower together on the 7th. This was due to continued selling pressure from institutional investors amid concerns that last month's 'employment boom' data in the United States would prompt the Federal Reserve's (Fed) hawkish monetary policy. The expectation that LG Energy Solution, which was listed on the KOSPI market last month, would be included in various indices this month also contributed to drawing a large amount of funds from the stock market, which was a factor in pulling down the index in the early session.

The KOSPI index closed at 2,745.06, down 5.20 points (0.19%) on the day. The index, which hit the 2,750 level earlier, turned lower shortly after the opening due to continued selling by institutional investors and fell below 2,720 during the session, but the decline was significantly reduced thanks to a net buying rally by individual investors. Individuals net bought stocks worth 810.1 billion KRW, while institutions net sold stocks worth 833.8 billion KRW. Foreign investors, who showed slight buying in the early session, ended the day with a net purchase of 5.5 billion KRW.

LG Energy Solution closed at 548,000 KRW, up 8.73% from the previous day. After plunging for three consecutive trading days following its listing on the 27th of last month, LG Energy Solution rebounded this month and was the only large-cap stock on the KOSPI to surge on the day. This was driven by expectations of passive funds flowing in as it is scheduled to be included in major indices, starting with the FnGuide Secondary Battery Industry Index, WISE Secondary Battery Theme Index, and EQM Lithium and Battery Technology Index.

The total passive funds expected to include LG Energy Solution are estimated to be about 2 trillion KRW. Following MSCI's early inclusion confirmation on the 27th of last month, LG Energy Solution is expected to be included in the MSCI Global Standard Index large-cap section as of the market close on the 14th (announcement on the 15th). Early inclusion in the KOSPI 200 index is anticipated on the 11th of next month.

Among the top market capitalization stocks on the day, only LG Energy Solution and Kakao (up 1.0%) rose, while all others declined. In particular, LG Chem (-5.75%) and Samsung SDI (-3.24%) fell sharply, and Kia also recorded a decline of over 3%.

On the 7th, dealers are working in the dealing room of Hana Bank in Euljiro, Seoul, where the KOSPI index showed weakness in the early session. Photo by Moon Honam munonam@

Lee Jin-woo, a researcher at Meritz Securities, said, "There was volatility in the early session due to supply and demand issues related to LG Energy Solution, but the decline narrowed in the afternoon." He added, "While LG Energy Solution rose sharply and the KOSPI fell slightly, the KOSPI 200's decline was larger because other stocks were sold in the early session to buy LG Energy Solution, causing volatility that calmed down in the latter part of the session."

The KOSDAQ index closed at 899.40, down 3.47 points (0.38%). After falling below the 900 level on the 25th of last month amid a sharp drop in the domestic stock market, it barely recovered the 900 level on the 4th, but the index, which fell in the early session, closed just below 900. Foreigners and institutions net sold stocks worth 277 billion KRW and 157 billion KRW respectively, but individuals defended the index by net buying stocks worth 439.7 billion KRW.

EcoPro BM fell sharply during the session due to an investigation into internal trading allegations but reduced its losses to close down 4.07%. Pearl Abyss also dropped 3.78%. Bio stocks such as HLB (-3.64%), Celltrion Healthcare (-2.79%), and Celltrion Pharm (-0.92%) also showed weakness.

Cheonbo rose 3.77% after posting strong earnings in the fourth quarter of last year, entering the top 10 in KOSDAQ market capitalization. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The market closed lower due to foreign and institutional selling amid concerns over hawkish monetary policy and economic normalization following strong U.S. employment data." He added, "Although the KOSPI fell more than 1% during the session, the decline narrowed after Australia announced on February 21 that it would reopen its borders to all foreigners."

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