KOSPI Dips Again to 2690 Level, 'Turned Blue' Amid Fed's Big Step Hike

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 22nd, the domestic stock market started off lower. Investor sentiment sharply froze due to burdens such as the Federal Reserve's (Fed) determination to tighten monetary policy and the rapid rise in interest rates.

On this day, the KOSPI opened at 2704.72, down 23.49 points (0.86%↓), and the KOSDAQ opened at 922.77, down 6.91 points (0.74%↓). Immediately after the opening, the KOSPI surrendered the 2700 level again, falling to the 2690 range. The KOSDAQ also showed difficulty maintaining the 920 level.

Institutions, which had shown net buying the previous day, turned back to net selling today, showing a selling dominance along with foreigners from the start of trading. As the KOSPI broke below the 2700 level, only individual investors remained on the buying side alone. As of 9:10 a.m., individuals have bought approximately 147.5 billion KRW and 51.8 billion KRW in the KOSPI and KOSDAQ markets, respectively. Foreigners sold about 7.2 billion KRW and 27.2 billion KRW in the two markets, respectively. The net selling amount by institutions is even larger, selling about 140.1 billion KRW and 22.6 billion KRW in the two markets, respectively. Financial investment, trust funds, and pension funds all show selling dominance.

Top market capitalization stocks in the KOSPI are also all declining. NAVER is down more than 2%, and Kakao is recording a drop in the high 1% range. Samsung Electronics also fell more than 1%, breaking below the 67,000 KRW level again.

The KOSDAQ market capitalization is similar. Kakao Games is down more than 2%, and Pearl Abyss, CJ ENM, Cheonbo, HLB, and Celltrion Pharm are also down more than 1%.

Seosangyoung, a researcher at Mirae Asset Securities, said, "Although the U.S. stock market started strongly higher early in the session due to the Tesla effect, the decline widened due to the selling of tech stocks caused by the sharp rise in Treasury yields, which is a burden on the Korean stock market." He added, "Especially, Fed Chair Jerome Powell's assertion that globalization has clearly slowed could dampen investment sentiment toward Korea, which is highly dependent on exports, which is also a burden." He further noted, "Moreover, considering ECB President Lagarde's expression of concerns about the economy and the weak Korean won, foreign demand is also negative, which will also burden the Korean stock market."

Meanwhile, the U.S. New York stock market closed lower across the board. Chair Powell strongly hinted at the possibility of a 50bp (1bp=0.01 percentage point) interest rate hike, causing investor sentiment to shrink. Many analyses suggest that the driving force of corporate strong earnings pushing stock prices up has weakened compared to before. On the 21st (local time) at the New York Stock Exchange, the Dow Jones Industrial Average, which gathers blue-chip stocks, closed at 34,792.76, down 1.05% from the previous trading day. The large-cap focused Standard & Poor's (S&P) 500 index recorded 4,393.66, down 1.48%. The tech-heavy Nasdaq index closed at 13,174.65, down 2.07%. Additionally, the small- and mid-cap focused Russell 2000 index fell 2.49%.

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