"‘Maepa’ Powell's Direct Blow Hits Domestic Stock Market, KOSPI Falls Over 2% to 2420 Level"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The domestic stock market closed with a decline of over 2% as Federal Reserve (Fed) Chair Jerome Powell delivered hawkish remarks at the Jackson Hole meeting. The KOSPI index closed around the 2420 level due to selling pressure from foreigners and institutions, while the KOSDAQ index fell below the 780 level for the first time since the 18th of last month, as institutions net sold.

On the 29th, the KOSPI index closed at 2,426.89, down 54.14 points (2.18%) from the previous session. This was the lowest closing level since the 27th of last month. The index opened at 2,432.06, down 48.97 points (1.97%) from the previous close, and the decline deepened throughout the day. Foreigners and institutions sold approximately 46.2 billion KRW and 558.9 billion KRW worth of stocks respectively, driving the index down. Meanwhile, individual investors were the sole net buyers, purchasing about 600.2 billion KRW worth.

Among the top market capitalization stocks, all declined. Kakao fell the most, dropping 5%. Following were NAVER (-3.31%), SK Hynix (-2.73%), Hyundai Motor (-2.58%), Samsung Electronics (-2.33%), Samsung Biologics (-2.13%), LG Chem (-1.95%), Kia (-1.77%), Samsung SDI (-1.71%), and LG Energy Solution (-1.29%). Notably, Samsung Electronics, the largest by market cap, fell to its lowest level in a month and a half since 57,500 KRW on the 14th of last month.

By sector, all sectors except non-metallic minerals (1.50%) were in the red. Transportation and warehousing (-3.67%), textiles and apparel (-3.48%), services (-3.28%), construction (-3.03%), medical precision (-2.95%), and distribution (-2.40%) declined in that order. Securities and finance sectors also fell by 2.34% and 2.32%, respectively.

The KOSPI took a direct hit from Powell’s speech at the Jackson Hole meeting. Powell reaffirmed the tightening stance, stating, "We must maintain a restrictive stance for the time being." He also said, "Unfortunately, reducing inflation comes with costs," and warned strongly against premature easing policies based on historical lessons.

The U.S. stock market also plunged more than 3%. On the 26th (local time), the Nasdaq index, focused on tech stocks, closed down 497.55 points (3.94%) at 12,141.71. The Dow Jones Industrial Average fell 1,008.38 points (3.03%) to 32,283.40, and the large-cap S&P 500 index dropped 141.46 points (3.37%) to 4,057.66.

Lee Kyung-min, a researcher at Daishin Securities, explained, "Volatility in the stock market increased due to Powell’s tough and hawkish remarks at last Friday’s Jackson Hole meeting. Powell emphasized that the risk of inflation persisting and becoming entrenched is greater, and expressed his determination to continue rate hikes and tightening despite the unfortunate costs involved in fighting inflation."

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Following Powell’s remarks at the Jackson Hole meeting, the sharp decline in the U.S. stock market affected Asian markets broadly, which showed weakness. The exchange rate hit its highest level in 13 years and 4 months, and the dollar index surpassed 109, weakening Asian currencies overall." As the dollar strengthened due to Powell’s comments, the won-dollar exchange rate rose 19.1 KRW to 1,350.4 KRW on the day.

The KOSDAQ index fluctuated around the 780 level before closing near 770. It ended the day at 779.89, down 22.56 points (2.81%) from the previous day. The previous trading day closed at 802.45, but the index opened at 780.48, down 21.97 points (2.74%). Individuals and foreigners bought approximately 102.4 billion KRW and 67.1 billion KRW worth respectively, while institutions net sold about 159.8 billion KRW.

Among the top market cap stocks, Alteogen and Celltrion Pharm fell more than 4%. Others that declined included L&F (-3.64%), Studio Dragon (-3.52%), Pearl Abyss (-3.22%), HLB (-2.98%), Celltrion Healthcare (-2.94%), EcoPro (-2.30%), Kakao Games (-2.11%), and EcoPro BM (-2.01%).

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