Foreign and Institutional Selling Pressure Drives KOSPI Down Over 1%... KOSDAQ Narrows Losses, Recovers Above 800 Level

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] On the 1st, the domestic stock market showed a downward trend. This is analyzed to be due to the weak Korean won caused by concerns over tightening as the U.S. stock market closed lower and the trade deficit for August recorded a deficit of $9.47 billion.

As of 11:20 a.m. that day, the KOSPI index was recorded at 2,435.89, down 36.16 points (1.46%) from the previous day. The index opened at 2,443.00, down 29.05 points (1.18%) from the previous session, but the decline widened and it was moving around the 2,430 level. Foreigners and institutions sold net amounts worth approximately 280.8 billion KRW and 473.2 billion KRW respectively, while individuals alone bought net amounts worth about 739 billion KRW.

Among the top market capitalization stocks, all stocks except LG Energy Solution (1.41%) were in decline. SK Hynix fell 2.52%, recording the largest drop, followed by Samsung SDI (-2.51%). Then Kakao (-2.32%), Naver (NAVER) (-2.08%), Samsung Electronics (-1.68%), LG Chem (-1.27%), Kia (-1.11%), Samsung Biologics (-1.08%), and Hyundai Motor (-0.77%) fell in order.

By industry, construction (-2.23%), textiles/apparel and medical precision (-2.16%), finance (-2.04%), and services (-1.96%) were weak.

At the same time, the KOSDAQ index was 800.51, down 6.53 points (0.81%) from the previous day. The KOSDAQ index started trading at 800.74, down 6.30 points (0.78%), but the decline widened and it fell below the 800 level. However, it later reduced the decline and recovered the 800 level. Foreigners and institutions sold net amounts worth about 100.8 billion KRW and 81.9 billion KRW respectively, while individuals bought net amounts worth 181.6 billion KRW.

Among the top market capitalization stocks, most were down except HLB (0.30%). Kakao Games fell 3.79% on news of users considering refund lawsuits. Then L&F (-3.34%), Pearl Abyss (-3.17%), EcoPro BM (-2.76%), and Alteogen (-2.35%) fell in order.

Lee Jae-sun, a researcher at Hyundai Motor Securities, explained, "The trade deficit announced today recorded the lowest level of the year, which led to the depreciation of the Korean won," adding, "The U.S. stock market closing lower also affected the domestic stock market."

According to the 'August Export-Import Trends' announced by the Ministry of Trade, Industry and Energy that day, exports last month were $56.67 billion, and imports were $66.15 billion. The trade balance showed a deficit of $9.47 billion. The trade deficit continued for five consecutive months since April, which is the first time in about 14 years that a deficit has lasted for five consecutive months. The won-dollar exchange rate opened at 1,342.0 KRW, up 4.4 KRW from the previous session, and at one point rose above 1,350.0 KRW.

Additionally, on the 31st of last month (local time), the Dow Jones Industrial Average fell 280.44 points (0.88%) to close at 31,510.43, the large-cap S&P 500 index closed down 31.16 points (0.78%) at 3,955.00, and the tech-heavy Nasdaq index recorded 11,816.20, down 66.93 points (0.56%).

As economic indicators showed that the employment market is slowing down, the U.S. stock market recorded gains early in the session. However, due to the European Central Bank (ECB)'s possibility of raising the benchmark interest rate by 75 basis points (1bp=0.01%), the market turned downward and the decline widened thereafter.

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