Foreigners Sell Off 1 Trillion Won Amid Shenzhen's 'Sudden Lockdown'... KOSDAQ Falls 2%

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] On the afternoon of the 14th, the domestic stock market showed a downward trend as foreigners sold more than 1 trillion won following the sudden lockdown of Shenzhen City, Guangdong Province, China, due to the spread of COVID-19. The KOSDAQ index turned downward during the morning session, recording a drop of more than 2%.

As of 2:13 PM that day, the KOSPI was trading at 2646.3, down 0.56% (14.98 points) from the previous trading day. The KOSPI, which started slightly weak, showed a rebound movement to the 2660 level early in the session, but the selling pressure from foreigners continued, widening the decline. Foreigners net sold about 680 billion won in the KOSPI market that day. In the KOSDAQ, they recorded net sales of 339 billion won, selling off more than 1 trillion won in total. Individuals net bought 640.8 billion won and institutions net bought 35.7 billion won in the KOSPI market.

The selling sentiment among foreigners was triggered by the combination of the U.S. strengthening sanctions on Russia amid its invasion of Ukraine and the added COVID-19 risk in China. As the spread of COVID-19 continued, Shenzhen health authorities imposed a stay-at-home order and locked down the city from that day until the 20th. Since Shenzhen is home to Shenzhen Port, the third largest cargo volume port in China, the National Health Commission made exceptions for logistics-related sectors such as transportation at Shenzhen Port, but import-export customs procedures inevitably operate abnormally.

Seo Sang-young, a researcher at Mirae Asset Securities, explained, "The market declined as selling pressure emerged following China's lockdown of Shenzhen," adding, "The impact has spread as Foxconn suspended its iPhone production plant in Shenzhen, which dampened investor sentiment." Foxconn, a Taiwanese company and the world's largest electronics contract manufacturer, plans to suspend factory operations and transfer production volume elsewhere due to the Shenzhen lockdown.

The continued weakness of the Korean won, which reached 1,240 won per dollar, also fueled the selling pressure from foreigners.

Among the top market capitalization stocks, LG Energy Solution recorded the largest drop, falling more than 6%. SK Hynix (-1.28%), Hyundai Motor (-3.25%), LG Chem (-3.28%), and Kia (-2.14%) also showed weakness. On the other hand, NAVER (NAVER)(0.91%), Samsung Biologics(1.02%), Kakao(2.96%), and Samsung SDI(1.46%) were on the rise. Samsung Electronics was trading flat.

By sector, textiles and apparel (-5.94%), chemicals (-2.18%), transportation equipment (-1.99%), non-metallic minerals (-1.96%), mid-cap stocks (-1.34%), and food and beverage (-1.24%) showed declines. Conversely, telecommunications (2.56%), steel and metals (1.92%), transportation and warehousing (1.22%), banking (1.08%), and insurance (0.65%) recorded gains.

At the same time, the KOSDAQ index was trading at 874.38, down 1.94% (17.33 points) from the previous session. The KOSDAQ opened at 893.18, up 0.16% (1.47 points) from the previous day, but turned downward and widened its losses. Foreigners and institutions sold 329.2 billion won and 132.4 billion won respectively, while individuals bought 482.4 billion won.

Among the top market capitalization stocks, Celltrion Healthcare (Celltrion Healthcare) and Celltrion Pharm (Celltrion Pharm), which resolved uncertainties related to accounting fraud for the first time in four years, rose more than 5%, showing strength. However, secondary battery-related stocks such as Ecopro BM (Ecopro BM)(-6.11%) and L&F (L&F)(-7.59%) were sharply down, and Wemade also recorded a drop of more than 5%.

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