Major Indices Continue Decline in Afternoon... Foreign and Institutional Selling Expands

Caution Builds Ahead of May FOMC
Afternoon Decline Eases but Market Ceiling Remains

On the 27th, when the KOSPI and KOSDAQ indices plunged by over 2%, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. The U.S. stock market sharply declined due to concerns over a slowdown in the economic recession and earnings uncertainty of big tech companies, which appears to have caused a chain reaction. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Yoon-joo] On the afternoon of the 2nd, the KOSPI and KOSDAQ continued their downward trend. Although the decline narrowed compared to the morning, foreigners and institutions are expanding their selling pressure.

On this day, the KOSPI recorded 2,684.13, down 0.41% from the previous session. Despite individuals net buying 238.3 billion KRW, foreigners and institutions net sold 88.9 billion KRW and 154.5 billion KRW respectively, causing the index to remain in a downward trend.

Among KOSPI stocks, 479 stocks are showing a decline. Among the top market capitalization stocks, only Hyundai Motor, Kia, and LG Chem maintained an upward trend, while Samsung Electronics turned to a flat position. Kakao fell the most at -2.67%, followed by Naver at -2.09%.

[Image source=Yonhap News]

Ahead of the May Federal Open Market Committee (FOMC) regular meeting in the U.S., the 'big step' (raising interest rates by 50 basis points at once) has become a foregone conclusion, which is interpreted as the reason for the large decline in growth stocks.

In the afternoon, the volatility index slightly decreased to 20.58 (+8.77%).

By sector, electric and gas utilities (-1.83%), insurance (-1.63%), services (-0.97%), finance (-0.99%), non-metallic minerals (-0.72%), and electrical and electronics (-0.48%) are showing a downward trend. The electric and gas utilities sector surged last week due to expectations of electricity rate hikes but is now declining due to short-term profit-taking. On the other hand, even in the down market, medical precision (+1.75%) and food and beverage (+1.28%) are showing strength.

The KOSDAQ narrowed its losses and settled above the 900 mark. Individuals alone are net buying 175.7 billion KRW. However, foreigners and institutions are net selling 31.5 billion KRW and 133.7 billion KRW respectively, causing the index to head downward.

Among all stocks, 795 are declining. Among the top market capitalization stocks, EcoPro BM (+2.85%) and LAF (+0.46%) turned to an upward trend in the afternoon. However, the remaining stocks are all showing declines in the 1-2% range.

Earlier in the day, the won-dollar exchange rate surged, raising concerns about foreign capital outflows, but individual buying is defending the supply and demand. The won-dollar exchange rate rose to 1,266.7 KRW at one point in the morning and has maintained the 1,266 KRW level into the afternoon.

Daishin Securities Research Center analyzed, "The KOSPI is narrowing its losses in the afternoon but lacks any special upward momentum. Ahead of this week's May FOMC meeting, cautious sentiment is entering, limiting the market's upside. The KOSDAQ is also down 0.5% due to selling pressure from foreigners and institutions."

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