KOSPI Falls Below 2700... Seeking Opportunities Amid Safe Assets

As the Possibility of Russian Invasion Grows
Preference for Safe-Haven Assets Increases

Due to geopolitical tensions surrounding Russia and Ukraine, the KOSPI started on a downward trend. On the 24th, a dealer is checking the situation in Ukraine at the Hana Bank headquarters dealing room in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Hwang Junho] As tensions between the West, including the United States, and Russia surrounding Ukraine escalate, the KOSPI has fallen below the 2700 mark. The possibility of a full-scale war, such as a Russian invasion, has increased preference for safe-haven assets. The market is actively seeking opportunities amid the heightened tension.

On the 24th, the KOSPI opened at 2,689.32, down 1.11% from the previous day. Although the KOSPI maintained an upward trend thanks to bargain buying the day before, it is now facing a tough defensive battle as geopolitical uncertainties rise.

Foreign investors have been withdrawing from the domestic stock market for five consecutive trading days. Rather than increasing the proportion of leveraged inverse ETFs, they are raising the short-selling ratio of Samsung Electronics, the KOSPI's leading stock. Following a short sale worth 45 billion KRW on the 11th, when Russia's plan to invade Ukraine was revealed, they conducted another short sale worth 40 billion KRW on the 22nd. This was the largest trading amount among all short-sold stocks. Foreigners accounted for 75% of the short-selling transactions that day. Jang Hyuncheol, a researcher at Korea Investment & Securities, analyzed, "If a full-scale war breaks out, countries whose core industries are high value-added manufacturing such as semiconductors are expected to be hit," adding, "This is because there may be difficulties securing semiconductor specialty gas raw materials like argon and neon from Ukraine and Russia."

[Image source=Yonhap News]

By industry, there is a forecast that demand for LNG carriers (about 70 vessels) will increase following Germany's suspension of the approval process for Nord Stream 2, the undersea gas pipeline project from Russia to Europe. Lee Dongheon, a researcher at Daishin Securities, said, "The increase in Europe's LNG imports will drive long-term demand for LNG carriers," and evaluated, "Korean shipyards and equipment suppliers have a technological advantage." Hyundai Heavy Industries showed a 0.91% rise as of 10 a.m. that day.

Preference for gold, a representative safe-haven asset, has also increased, with gold prices settling at $1,900 per ounce. U.S. Treasury yields approached the 2% range, reflecting inflation concerns due to rising oil prices despite war risks, and worries about Federal Reserve tightening.

However, concerns have been raised that inflationary pressures could undermine these opportunities, as wheat prices, with Ukraine as a major producing region, rose 3.78% the previous day and surged 12.60% over the past five days, reaching a nine-year high.

Seo Sangyoung, a researcher at Mirae Asset Securities, analyzed, "If prices of wheat, corn, and other commodities continue to rise, global economic growth will inevitably decline," adding, "While central banks such as the U.S. Federal Reserve have strengthened the rationale for raising benchmark interest rates, premature moves could lead to a recession, making decisions difficult." Meanwhile, the Bank of Korea kept its benchmark interest rate unchanged that day, citing geopolitical uncertainties and other reasons.

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