KOSPI and KOSDAQ Start with 1% Gains... Stock Market Responds to UK's Tax Cut Withdrawal

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[Asia Economy Reporter Hwang Yoon-joo] The KOSPI and KOSDAQ started the day with gains of over 1% on the 18th. In the case of KOSDAQ, it rose more than 2% within just 10 minutes of opening. This is interpreted as a recovery in risk appetite following the withdrawal of most of the tax cut plans by Jeremy Hunt, the new UK Chancellor of the Exchequer.

As of 9:08 a.m., KOSPI was trading at 2,246.25, up 1.20% from the previous day. KOSPI opened at 2,249.15, up 1.33%.

Both individual and institutional investors are driving the index with combined buying. Individuals and institutions are net buying 34.2 billion KRW and 56.2 billion KRW respectively. Meanwhile, foreign investors are net selling 91.7 billion KRW. However, foreign investors are purchasing 13 billion KRW worth in the futures market.

Among the top 10 stocks by market capitalization, all are rising except SK Hynix, which is flat. LG Chem leads the gains with a 3.83% increase, followed by Naver at 2.40%, Celltrion at 2.06%, and Hyundai Motor at 1.50%.

As of 9:14 a.m., KOSDAQ was at 696.07, up 2.06% from the previous day. KOSDAQ opened at 692.39, up 1.52%.

KOSDAQ is being driven by individual investors alone, who are net buying 45 billion KRW. In contrast, foreign and institutional investors are net selling 44.5 billion KRW and 1.9 billion KRW respectively.

All of the top 10 stocks by market capitalization on KOSDAQ are rising. Pearl Abyss, which had been weak, leads the gains with a 4.00% increase. It is followed by Celltrion Pharm at 2.52%, HLB at 2.31%, EcoPro at 2.21%, and Celltrion Healthcare at 2.21%.

The rise in KOSPI and KOSDAQ is due to the easing of financial instability originating from the UK. On the 17th (local time), the UK Chancellor announced the withdrawal of the plan to reduce the basic income tax rate from the current 20% to 19% starting next April. The government backed down amid growing concerns that the large-scale tax cut policy could lead the UK to seek a bailout. Consequently, the US stock market also closed higher, led by technology stocks.

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "The UK Chancellor’s decision to effectively abolish the tax cut policy, including the cancellation of the income tax rate reduction, through a short-term budget announcement to stabilize market anxiety contributed to the recovery of market risk appetite."

She added, "Although the postponement of China’s economic indicator announcements could affect the stock market, overall risk appetite is expected to recover, so the downward pressure on stock prices from China is likely to be low."

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