'Black Monday' Puts KOSPI 2500 at Risk... Foreigners and Institutions Sell Off Bombardment "Plunge Accelerates"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 13th, the KOSPI and KOSDAQ indices, which started lower, are staggering as their declines widened in the afternoon. The drop exceeded 3% for KOSPI and 4% for KOSDAQ. It is virtually a 'Black Monday' scenario.

As of 1:46 PM, the KOSPI index is recording 2509.55, down 3.33% from the previous trading day. The index opened at 2550.21, down 45.66 points (1.76%) from the previous day, and continued to fall, breaking the yearly low of 2546.80 set on the 12th of last month. Additionally, it fell below the 2510 level for the first time since November 2020.

The U.S. May Consumer Price Index (CPI) greatly exceeded market expectations, intensifying inflation fears and pressuring financial markets. The U.S. Department of Labor announced on the 10th (local time) that the May CPI recorded 8.6%. The May CPI was 0.3 percentage points higher than the market expectation of 8.3%, marking the highest level in 41 years. The market is increasingly anticipating that the Federal Open Market Committee (FOMC) regular meeting in June might implement a 'giant step' by raising the benchmark interest rate by 0.75 percentage points at once. The Fed has never implemented such a sharp rate hike since 1994.

At this time, the KOSDAQ's decline is even greater. The KOSDAQ is down 4.21%, recording 833.25.

The supply and demand environment is also unfavorable. Foreigners and institutions are selling, while individuals are buying, but it is insufficient. Foreigners and institutions are net sellers of 389.8 billion KRW and 241.3 billion KRW respectively in the KOSPI market. In the KOSDAQ market, they are also net sellers with 34.8 billion KRW and 58 billion KRW respectively. On the other hand, individuals are net buyers of 599.6 billion KRW and 94.2 billion KRW in both markets respectively.

Currently, all of the top 10 KOSPI market capitalization stocks are falling. In particular, Hyundai Motor (-5.69%) and Naver (-5.00%) are showing large declines in the 5% range, while Kakao (-4.74%), LG Chem (-3.95%), and SK Hynix (-3.77%) continue to fall. By KOSPI sector, all sectors are declining. Medical Precision (-5.70%), Construction (-4.55%), Services (-4.39%), and Machinery (-4.20%) are falling sharply.

Among the top KOSDAQ market capitalization stocks, all are falling except for L&F (1.52%), PNT (1.07%), EcoPro BM (0.96%), Sangsangin (0.81%), and Wemade Max (0.43%). By KOSDAQ sector, all sectors except Food & Beverage and Tobacco (0.79%) are declining. Other Services (-5.61%), Telecommunications Equipment (-5.38%), Pharmaceuticals (-5.13%), and Digital Contents (-5.11%) are experiencing large drops.

Lee Jin-woo, head of the investment strategy team at Meritz Securities, said, "The Fed's monetary policy is not controlling inflation, and even if interest rates are raised significantly, it is unlikely that inflation will be immediately controlled." He added, "I believe that stock prices form a bottom when there is a policy shift or valuations become sufficiently cheap, but currently, uncertainty is high. Although the market correction has already progressed significantly, increasing cash holdings and adopting a wait-and-see strategy is effective at this time."

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