Powell's 'Hawkish' Speech Shockwave... KOSPI Drops Over 2% Amid Foreign and Institutional Selling

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[Asia Economy Reporter Lee Jung-yoon] The KOSPI index fell more than 2% as both foreigners and institutions engaged in heavy selling. The KOSDAQ index also showed a decline of over 2% due to net selling by institutions. The domestic stock market could not escape the shock from the hawkish remarks made by Jerome Powell, Chairman of the U.S. Federal Reserve (Fed).

As of 11:18 a.m. on the 29th, the KOSPI index was recorded at 2,427.58, down 53.45 points (2.15%) from the previous session. The index opened at 2,432.06, down 48.97 points (1.97%) from the previous close, with foreigners and institutions selling approximately 91.5 billion KRW and 279.3 billion KRW worth of stocks respectively, widening the decline. Individuals alone bought stocks worth 360.6 billion KRW, helping to cushion the index's fall. At one point during the session, the index even dropped below the 2,420 level.

Among the top market capitalization stocks, all showed declines. Kakao fell 4.61%, NAVER dropped 3.93%, LG Chem decreased 3.41%, and Hyundai Motor declined 3.36%, all recording losses in the 3% range. Following were SK Hynix (-2.84%), Samsung Biologics (-2.13%), Samsung SDI (-2.05%), Samsung Electronics (-2.00%), LG Energy Solution (-1.93%), and Kia (-1.77%).

By sector, textiles and apparel showed the largest drop at 3.74%. This was followed by transportation and warehousing (-3.44%), services (-3.34%), and construction (-2.67%). Electricity and gas (-0.61%) and steel and metals (-0.69%) recorded relatively smaller declines.

On this day, the KOSPI declined as Chairman Powell reaffirmed the tightening stance in his speech at the Jackson Hole meeting. Powell stated, "We need to maintain a restrictive stance for the time being," and added, "Unfortunately, reducing inflation comes with costs."

Following Powell's speech, the U.S. stock market also fell sharply. On the 26th (local time), the tech-heavy Nasdaq index closed down 497.55 points (3.94%) at 12,141.71. The Dow Jones Industrial Average dropped 1,008.38 points (3.03%) to 32,283.40, and the large-cap S&P 500 index fell 141.46 points (3.37%) to 4,057.66.

Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, "The impact of Chairman Powell's speech is extending from the U.S. stock market to the domestic market," adding, "The exchange rate is also being affected."

As Powell's speech triggered a stronger dollar, the KRW/USD exchange rate rose to the mid-1,348 won level during the session. This surpassed the intraday high recorded on the 23rd, breaking the record after four trading days.

At the same time, the KOSDAQ index was recorded at 781.40, down 21.05 points (2.62%) from the previous trading day. The KOSDAQ index closed at 802.45 the previous day but started at 780.48, down 21.97 points (2.74%), breaking below the 800 level. Individuals and foreigners bought stocks worth approximately 56.4 billion KRW and 37.2 billion KRW respectively, while institutions sold stocks worth 87.1 billion KRW.

Among the top market capitalization stocks, Alteogen (-4.44%), L&F (-4.34%), Pearl Abyss (-3.94%), Studio Dragon (-3.65%), Celltrion Pharm (-3.57%), EcoPro BM (-2.98%), Celltrion Healthcare (-2.80%), EcoPro (-2.66%), Kakao Games (-1.72%), and HLB (-1.49%) declined in that order.

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