"Can't Trust Fed" Foreign and Institutional Dual Selling... KOSPI Falls to 2640 Level

Nasdaq Plunge Sends Naver, Kakao and Other Korean IT Stocks Tumbling
Foreign Investors Sell in Spot and Futures Markets
Market Distrust Grows Despite Fed Ruling Out 'Giant Step'
Widening Belief That Current Tightening Makes Inflation Control Difficult
UK BOE Warns of Global Economic Slowdown
KOSPI and KOSDAQ Both Fall Over 1%

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 among big tech companies, which appears to have caused a chain reaction. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Yoon-joo] On the 6th, both the KOSPI and KOSDAQ closed lower. Foreign investors and institutions simultaneously showed net selling, exerting downward pressure.

◆ Holding losses within 1%... Big Tech Plummets= On that day, the KOSPI closed at 2,644.51, down 33.06 points (1.23%). The KOSPI index, which started at 2,690.16, down 1.00%, widened its losses in the afternoon, falling to as low as 2,635.97. The KOSDAQ closed at 884.22, down 15.84 points (1.76%). It started at 888.54, down 11.52 points (-1.28%), and gradually widened its losses.

The KOSPI decline was largely influenced by simultaneous selling by foreign investors and institutions. Foreigners and institutions net sold 483.5 billion KRW and 300.2 billion KRW, respectively. Individuals net bought 762.7 billion KRW. Foreigners also net sold 366.1 billion KRW in the futures market, marking three consecutive trading days of selling.

Looking at institutions within the KOSPI, financial investment (-153.4 billion KRW) and private equity funds (-112.0 billion KRW) led the selling. Investment trusts (-34.4 billion KRW) and insurance (-14.7 billion KRW) also joined the selling. Pension funds showed net selling until the afternoon but turned to net buying before the market close, purchasing 11.5 billion KRW.

[Image source=Yonhap News]

In the KOSDAQ, foreigners and institutions net sold 58.7 billion KRW and 188.0 billion KRW, respectively. Individuals net bought 243.1 billion KRW. Among institutions, financial investment (-74.9 billion KRW), private equity funds (-57.4 billion KRW), investment trusts (-32.0 billion KRW), and pension funds (-22.5 billion KRW) all led the selling.

Jae-hyuk Han, a researcher at Hana Financial Investment, analyzed, "The KOSPI closed lower due to the combined selling pressure from foreign investors and institutions, whose investment sentiment was dampened by the previous day's plunge in the U.S. stock market. The rise in U.S. Treasury yields the day before caused significant declines in leading domestic internet companies Naver and Kakao."

[Image source=Reuters Yonhap News]

Market experts in the securities industry evaluated that the KOSPI decline was influenced by the sharp drop in the U.S. stock market and concerns over global economic slowdown. On the 4th (local time), the U.S. Federal Reserve (Fed) stated after the Federal Open Market Committee (FOMC) meeting that it would not consider a 'giant step' (75 basis points hike). However, on the 5th (local time), the Governor of the Bank of England (BOE) expressed concerns about a sharp economic slowdown, causing U.S. Treasury yields to surge and the U.S. stock market to plunge within a day. The market broadly spread the judgment that controlling inflation would be difficult under the current tightening policy.

The stock hitting the upper price limit was Busan Jugong (963 KRW). There were 227 rising stocks and 655 declining stocks. In the KOSDAQ, two stocks hit the upper price limit: THQ (3,835 KRW) and GL PharmTech (1,310 KRW).

Among the top 10 KOSPI stocks by market capitalization, Kakao had the highest decline rate at -5.28%. Naver followed at -3.55%, and Samsung Electronics at -2.06%. On the other hand, Samsung SDI +0.82%, LG Chem +0.39%, and Kia +0.48% closed higher. Among the top 10 KOSDAQ stocks by market capitalization, only HLB +1.53% rose. Pearl Abyss -4.89%, L&F -4.50%, and EcoPro BM -4.15% ranked among the highest decliners.

Looking at sector performance on the KOSPI, Textile & Apparel -2.34%, Services -2.17%, and Pharmaceuticals -2.00% showed notable declines. Only Paper & Wood +1.37% and Transportation & Warehousing +1.08% closed higher.

[Image source=Yonhap News]

On that day in the Seoul foreign exchange market, the KRW/USD exchange rate opened at 1,267.0 KRW, up 0.7 KRW, and closed at 1,272.7 KRW, up 6.4 KRW. It surged to as high as 1,275.80 KRW early in the session.

Sang-young Seo, head of the Media Content Division at Mirae Asset Securities, pointed out, "The domestic stock market showed a synchronization phenomenon due to the sharp rise in U.S. Treasury yields and the expanded decline in tech stocks. The Dollar Index surged to 103.93, marking the highest level in 20 years."

Researcher Seo explained, "The sharp depreciation of the yuan exchange rate during the session also pressured the KRW/USD exchange rate, and foreign investors increased their selling in both spot and futures markets."

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