LG EnSol-Originated Supply-Demand Distortion Aftershocks Continue... Afternoon Market Turns Down

On the 7th, when the KOSPI index showed weakness in the early session, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Ji Yeon-jin] The domestic stock market turned to a downward trend on the afternoon of the 8th. Although international oil prices, which had been considered a negative factor for the stock market, fell and the won-dollar exchange rate rose, stimulating buying sentiment in the early session, it is interpreted as a result of growing caution ahead of LG Energy Solution's inclusion in the MSCI index on the 14th of this month.

The KOSPI index turned downward around 2:17 p.m. that day and is trading around the 2740 level. The index, which started higher, recovered to just below 2780 in the early session but gave up the gains during the day and eventually turned downward. Foreign investors led the decline by net selling about 79.2 billion won. Individuals and institutions are net buying about 32.3 billion won and 45.8 billion won, respectively.

The reversal of the index to a decline that day is attributed to the supply-demand distortion of LG Energy Solution (-1.82%). LG Energy Solution, which rose to the second largest market capitalization on the KOSPI after its listing on the 27th of last month, saw its stock price plunge for two consecutive days due to profit-taking by foreign investors from the day of listing. The domestic stock market, frozen by concerns over U.S. monetary tightening, further widened the decline due to LG Energy Solution's selling pressure.

Lee Kyung-min, a researcher at Daishin Securities, said, "It seems to be a certain degree of caution ahead of LG Energy Solution's MSCI inclusion on the 14th," adding, "Although the won-dollar exchange rate decline is favorable during the day, the KOSPI surpassing the 2750 level is creating a cautious atmosphere rather than a clear direction."

Since the beginning of this month, the early inclusion of various indices has been confirmed, leading to a surge driven by expectations of passive fund inflows, and the market showed strength in the early session that day, marking the fourth consecutive day of gains.

Among the top market capitalization stocks on the KOSPI, only Samsung Biologics (5.90%) is showing a significant rise. The recovery in biotech stocks appears to have been fueled by expectations of a windfall benefit due to U.S. export restrictions on Chinese biotech companies. LG Chem (-2.97%) and Samsung SDI (-2.29%) are showing the weakest performance.

The KOSDAQ index also turned downward from the afternoon, trading down 6.34 points (0.70%) at 893.06. The index recovered in one day after falling below 900 the previous day but has been trading below 900 for two consecutive days. Foreign investors net sold about 158.5 billion won, while individuals and institutions net bought about 165.8 billion won and 4.5 billion won, respectively.

Game stocks such as Wemade (5.43%), Pearl Abyss (5.21%), and Kakao Games (2.66%) surged sharply in the early session but have partially given up gains in the afternoon.

EcoPro BM (-1.23%), which showed strength in the early session, reversed to a decline, and Cheonbo (-2.32%) and Seegene (-3.68%) widened their losses. HLB is also recording a 2.36% decline.

Han Ji-young, a researcher at Kiwoom Securities, predicted, "LG Energy Solution will be included in the secondary battery ETF later this week and is scheduled for early inclusion in the MSCI index on the 14th, so the aftereffects of the supply-demand distortion surrounding this will continue until that period."

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