US 3 Consecutive Giant Steps Lead KOSPI to Start Down Over 1%... Won-Dollar Exchange Rate Surpasses 1400 Won

[Image source=Yonhap News]

[Asia Economy Reporter Myung-hwan Lee] On the 22nd, the KOSPI retreated to the 2320 level, showing a decline of over 1% shortly after the market opened. This is interpreted as an effect of the U.S. Federal Reserve's (Fed) decision to implement a third consecutive giant step (raising the benchmark interest rate by 0.75 percentage points at once). The won-dollar exchange rate also surpassed 1,400 won for the first time in about 13 years and 6 months.

As of 9:06 a.m. that day, the KOSPI was at 2,323.34, down 1.02% (23.87 points) from the previous trading day. The KOSPI opened at 2,319.70, down 1.17% (27.51 points).

In the securities market, foreign investors alone sold stocks worth 40.8 billion won. The strengthening dollar trend appears to have put pressure on foreign demand. On the other hand, individual and institutional investors bought stocks worth 29 billion won and 2.4 billion won, respectively.

Most of the top market capitalization stocks in the securities market are declining. Samsung Electronics traded at 54,600 won, down 1.27% (700 won) from the previous day, breaking below the 55,000 won level. Other semiconductor stocks such as SK Hynix (-1.36%) and Samsung Electronics Preferred (-0.70%) are also falling. Large internet stocks like NAVER (-2.11%) and Kakao (-2.81%) also saw significant declines. LG Energy Solution (0.21%) was the only stock showing a slight rise.

At the same time, the KOSDAQ index stood at 746.14, down 1.16% (8.75 points) from the previous trading day. The KOSDAQ opened at 746.82, down 1.07% (8.07 points).

Foreign investors are also net sellers of stocks worth 4.2 billion won in the securities market. Institutions sold 3.8 billion won worth of stocks. Individual investors are net buyers of 8.9 billion won.

Among the top market capitalization stocks in KOSDAQ, only EcoPro (0.53%) and EcoPro BM (0.19%) showed slight gains. JYP Ent. (-2.24%), Alteogen (-2.34%), and Kakao Games (-1.64%) experienced significant declines.

The decline in the domestic stock market at the start of the day appears to be influenced by the Fed's decision to implement a third consecutive giant step. On the 21st (local time), the Fed held its Federal Open Market Committee (FOMC) regular meeting and announced a 0.75 percentage point increase in the benchmark interest rate. As inflation remains stubborn, the Fed took the unusual step of three consecutive giant steps. At the same time, the U.S. benchmark interest rate once again surpassed Korea’s, causing a reoccurrence of the benchmark interest rate inversion phenomenon.

The strong dollar trend is also expected to act as a burden. In the Seoul foreign exchange market that day, the won-dollar exchange rate exceeded 1,400 won shortly after the market opened. The exchange rate reaching the 1,400 won level is the first time since March 31, 2009, during the financial crisis, about 13 years and 6 months ago.

On that day, the domestic stock market is expected to experience increased volatility due to the U.S.'s aggressive rate hike stance and Fed Chair Jerome Powell’s hawkish remarks, according to securities firms. Sang-young Seo, head of the Media Content Division at Mirae Asset Securities, said, "The U.S. stock market confirmed a more aggressive rate hike stance through a higher-than-expected interest rate forecast for this year, and the decline following Fed Chair Powell’s remarks will act as a burden on the domestic stock market. Considering that the Fed reiterated its aggressive rate hike stance by expressing concerns about recession issues and prolonged housing-related inflation, an expansion of volatility is inevitable."

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