KOSPI Barely Holds 2700... KOSDAQ Closes Down 2.81%

Stock Market Shock from Russia-Ukraine Conflict
KOSPI Falls Below 2700 Intraday but Recovers by Close
KOSDAQ Ends Down 2.81% Amid Inflation Concerns

On the 14th, dealers are working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index opened at 2715.10, down 32.61 points (1.19%) from the previous trading day. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] On the 14th, the stock market closed lower amid growing geopolitical uncertainties such as the conflict between Russia and Ukraine.

On that day, the KOSPI closed at 2,704.48, down 43.23 points (1.57%) from the previous session. Individual investors led the decline by net selling 186.9 billion KRW due to fear stemming from uncertainty. In contrast, institutions and foreigners net bought 93.4 billion KRW and 70.7 billion KRW respectively, but could not overcome the prevailing fear. As a result, the KOSPI fluctuated, falling below the 2,700 level during the session before recovering and closing.

In the morning, the won-dollar exchange rate rose, raising expectations for foreign inflows, but it turned weaker in the afternoon, making the situation unfavorable. The won-dollar exchange rate closed at 1,191.10, down 0.62% from the previous session. Foreigners only switched to net buying near the market close.

LG Energy Solution, Recall Damage?

On the morning of the 27th, Kwon Young-soo, CEO of LG Energy Solution, who attended the KOSPI new listing ceremony of LG Energy Solution held at the Korea Exchange in Yeouido, Seoul, is moving to his seat. Photo by Kang Jin-hyung aymsdream@

Among all stocks, only 116 stocks closed higher. Although the number of rising stocks increased compared to the morning, the magnitude of gains decreased.

Among the top market capitalization stocks, Samsung Biologics showed noticeable gains. This stock closed up 1.19% at 763,000 KRW. This appears to be due to increased expectations for a positive effect following news that the U.S. government added 33 companies, including Wuxi Biologics, a leading Chinese pharmaceutical company listed on the Hong Kong stock exchange, to the unverified list.

Accordingly, the pharmaceutical sector (0.46%) stood out with gains in the market that day. Besides Samsung Biologics, SK Bioscience rose 4.17%, Ildong Pharmaceutical 3.57%, Ilseong Pharmaceutical 1.90%, among others, maintained upward momentum to close higher.

Among the top market cap stocks, the perennial leader Samsung Electronics closed down 1.60% at 73,700 KRW. The decline widened on news that expatriates from domestic companies including Samsung were withdrawing from Ukraine one after another.

LG Energy Solution plunged 3.94% (463,000 KRW per share). This appears to be influenced by news that Stellantis is recalling about 20,000 plug-in hybrid (PHEV) minivans due to fire risk. Regarding this, LG Energy Solution, the battery supplier for the affected vehicles, stated on the 11th (local time) that "the fundamental cause of fire in the recalled Stellantis vehicles has not been identified. There is no evidence directly linking the battery," and added, "Considering Stellantis' position, we will not make further comments."

NAVER and Kakao also fell 1.68% and 3.16% respectively, while Hyundai Motor and Samsung SDI closed with losses in the 3% range.

Doosan Heavy Industries Drops 000%

[Image source=Yonhap News]

The sector with the largest decline was machinery, down 4.28%. In particular, Doosan Heavy Industries closed at 15,600 KRW, down 10.09%. Besides the overall negative market conditions, the stock slid due to the government's accelerated nuclear phase-out policy and under-subscription of a rights offering. The subscription rate for Doosan Heavy Industries' rights offering, which ended on the 11th, was 97.44%. Due to under-subscription, about 2.12 million shares of forfeited rights will be allocated to existing shareholders.

The KOSDAQ also showed a decline of 2.81%, closing at 852.79. While foreigners and institutions net bought 94.9 billion KRW and 19.6 billion KRW respectively, individual investors net sold 116.8 billion KRW, widening the losses.

Among all stocks, only 108 stocks rose. Among the top market cap stocks, pharmaceutical stocks such as Celltrion Healthcare (1.16%) and Celltrion Pharm (0.35%) showed notable gains. Following these, game stocks such as Pearl Abyss (1.28%) and Wemade (1.25%) also showed upward trends.

Will Geopolitical Uncertainty Lead to Economic Instability?

[Image source=Yonhap News]

The biggest cause of the market weakness that day was cited as geopolitical uncertainty. Lee Kyung-min, a researcher at Daishin Securities, analyzed, "In a situation where monetary policy burdens have intensified, various negative factors such as escalating geopolitical risks surrounding the Ukraine crisis and fundamental uncertainties overlapped, leading to a contraction in investor sentiment."

He added, "Due to the escalation of geopolitical risks, the current crude oil futures (94.47) are approaching $95, raising concerns about increased inflationary pressures. On the surface, the Ukraine crisis acted as a factor dampening investor sentiment, but fundamentally, uncertainties also exist," he explained.

Seo Sang-young, a researcher at Mirae Asset Securities, also analyzed, "Along with increased inflationary burdens such as crude oil and grains, concerns about a stronger rate hike emerged ahead of the Federal Open Market Committee minutes release, leading to a decline bias in the KOSDAQ."

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