'Fiscal Tightening Fear' KOSPI Falls Below 2600 Intraday

KOSPI Continues to Decline
Fear Grows Amid Aggressive US Tightening

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Junho] On the 7th, the stock market continued its downward trend amid simultaneous net selling by foreigners and institutions. It is analyzed that investor sentiment has weakened as the U.S. began quantitative tightening and raised the possibility of accelerating monetary policy by increasing the benchmark interest rate by more than 50bp at the May Federal Open Market Committee (FOMC) meeting.

As of 1:52 PM, the KOSPI recorded 2701.61, down 33.42 points (1.22%) from the previous session. Although individuals engaged in net buying worth 992.8 billion KRW, foreigners and institutions net sold 537.3 billion KRW and 348.5 billion KRW respectively, widening the market's decline. Earlier in the day, the index broke below the 2700 level and entered the 2600 range.

Among all KOSPI stocks, 175 showed gains. Among the top market capitalization stocks, Samsung Biologics recorded 817,000 KRW, up 0.49% from the previous session. Samsung Securities expects Samsung Biologics' first-quarter earnings this year to increase. Sales are projected to reach 464.9 billion KRW, up 78.3% year-on-year, and operating profit is expected to be 152.5 billion KRW, up 105.7% year-on-year. Although labor costs increased and regular maintenance costs for the second plant were reflected, Samsung Securities explained that performance is expected to improve as the operating rate of the third plant, which had slightly declined in the previous quarter, increased.

Samsung Electronics is struggling despite strong first-quarter earnings. Samsung Electronics is down 0.44% to 68,200 KRW from the previous session. Before the market opened, Samsung Electronics announced that its consolidated operating profit for the first quarter of this year was 14.1 trillion KRW, a 50.32% increase compared to the same period last year. This also exceeded the average operating profit forecast of 13.0849 trillion KRW from securities firms compiled until the previous day. Sales reached 77 trillion KRW, up 17.76% from the same period last year, marking the highest ever for a first quarter. This is the first time quarterly sales have exceeded 70 trillion KRW.

By industry, only the food and beverage sector (0.30%) showed an upward trend. Driven by reopening expectations, Nongshim (3.59%), Samyang Foods (3.43%), Daehan Sugar (2.07%), CJ CheilJedang (1.80%), and Haitai Confectionery & Foods (1.24%) led the sector's overall rise.

The KOSDAQ recorded 929.42, down 13.71 points (1.45%). On the KOSDAQ as well, individuals showed net buying intentions worth 410.1 billion KRW, but foreigners and institutions net sold 253.1 billion KRW and 144.4 billion KRW respectively, increasing the decline.

Among all stocks, 209 are showing gains. Among the top 10 by market capitalization, about three stocks are rising. EcoPro BM, which became the top market cap stock on the KOSDAQ the previous day, is up 0.92% to 422,770 KRW. L&F is up 2.77% to 237,400 KRW, and Pearl Abyss is up 0.19% to 103,700 KRW. By industry, other manufacturing is up 0.37%.

The exchange rate is currently at 1218.40 KRW. Due to the strong dollar, the won-dollar exchange rate started at 1220 KRW right after the market opened. It then fell to 1216 KRW due to the Chinese central bank's appreciation announcement and slight euro strength ahead of the European Central Bank (ECB) monetary policy meeting minutes release in the evening. However, amid increased risk aversion and continued net selling by foreigners in the stock market, the rate reversed and rose again.

The market decline today is analyzed to be due to the U.S.'s aggressive monetary policy normalization stance. Lee Kyung-min, a researcher at Daishin Securities, said, "Investors seem to feel somewhat burdened by the detailed quantitative tightening content that was clarified when the Federal Open Market Committee (FOMC) minutes, which determine the direction of the U.S. monetary policy, were released on the 6th (local time)." However, he added, "From a mid- to long-term perspective, it could be positive as the market is preemptively reflecting the burden of high-intensity rate hikes and quantitative tightening."

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