KOSPI Drops Sharply Amid Japan's Monetary Easing Reduction... Exchange Rate Falls 13 Won to 1280 Range

Bank of Korea Emphasizes Inflation - China Announces Loan Prime Rate Freeze Amid Negative Factors
Won-Dollar Exchange Rate Closes at 1289.6 Won, Down 13.3 Won from Previous Close

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The KOSPI index closed lower as foreigners and institutions sold off shares.

On the 20th, the KOSPI index closed at 2,333.29, down 18.88 points (0.80%) from the previous day. It fell for the fourth consecutive trading day. The index started at 2,344.73, down 7.44 points (0.32%), then showed a downward trend before turning upward to reach 2,353.86. However, it declined again in the afternoon, breaking below the 2,330 level and even hitting 2,324.66. Individual investors were the sole net buyers with purchases worth approximately 104.9 billion KRW, while foreigners and institutions were net sellers with sales of about 103.3 billion KRW and 26.6 billion KRW, respectively.

Among the top market capitalization stocks, most declined except for LG Energy Solution (1.14%). Naver (NAVER) (-1.63%), Samsung Electronics (-1.51%), Hyundai Motor (-1.26%), SK Hynix (-0.89%), Celltrion (-0.84%), LG Chem (-0.32%), Samsung SDI (-0.31%), and Samsung Biologics (-0.12%) all fell. Kia remained flat.

By sector, the medical precision sector dropped more than 3%, followed by transportation and warehousing (-1.76%), services (-1.65%), paper and wood (-1.34%), machinery (-1.24%), chemicals (-1.00%), and electrical and electronics (-0.95%). Food and beverage (0.63%), securities (0.44%), insurance (0.41%), and electric gas and finance (0.06%) sectors rose.

The won-dollar exchange rate closed at 1,289.6 KRW, down 13.3 KRW from the previous day's closing price.

Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, "The Bank of Korea's announcement to continue inflation-focused monetary policy, China's consecutive freeze of the Loan Prime Rate (LPR), and the Bank of Japan's (BOJ) indication of policy changes caused a sharp rise in government bond yields, expanding the index's decline." He added, "The won strengthened following the yen's sharp appreciation, but foreign selling also increased."

Earlier, the Bank of Korea indicated it would maintain its rate hike stance, expecting consumer prices to continue rising around 5% for the time being. Bank of Korea Governor Lee Chang-yong said, "It is necessary to continue operating monetary policy focused on inflation."

The BOJ, which had maintained large-scale monetary easing policies to stimulate the economy, decided to revise them. On this day, the BOJ decided to guide the 10-year government bond yield around 0%, but expand the allowable fluctuation range from the previous '±0.25%' to '±0.5%'. The short-term interest rate was maintained at -0.1% as expected. Meanwhile, China's central bank, the People's Bank of China, announced the 1-year LPR at 3.65%, unchanged from the previous month. Despite recession concerns, it was frozen consecutively.

The KOSDAQ index fell nearly 2%. It closed at 703.13, down 14.09 points (1.96%) from the previous day. Individuals were net buyers with about 92.1 billion KRW, while foreigners and institutions were net sellers with approximately 73.0 billion KRW and 27.1 billion KRW, respectively. The KOSDAQ index dropped to 701.44 during the session, putting the 700 level at risk, but the decline narrowed.

Among the top market capitalization stocks, Pearl Abyss (-4.21%) recorded the largest drop. Studio Dragon and Kakao Games also fell more than 3%. Following were L&F (-2.80%), HLB (-1.42%), Celltrion Healthcare (-1.23%), EcoPro BM (-0.50%), and Lino Industrial (-0.25%). EcoPro rose 0.70%, and Celltrion Pharm remained flat.

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