[Good Morning Stock Market] Tesla Plummets, Concerns Over Chinese Inflation... KOSPI Expected to Start Lower

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] On the 28th, the domestic stock market is expected to start lower. It is likely to be influenced by the decline in the Nasdaq due to weakened investor sentiment across the electric vehicle sector in the U.S. stock market.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,241.56, up 37.63 points (0.11%) from the previous session. In contrast, the large-cap focused S&P 500 index fell 15.57 points (0.40%) to 3,829.25, and the tech-heavy Nasdaq index dropped 144.64 points (1.38%) to 10,353.23.

Seo Sang-young, Head of Future Asset Securities: "KOSPI expected to start down about 1%"

The KOSPI is expected to start down about 1%, considering the ex-dividend effect. This is due to the Nasdaq's decline caused by weakened investor sentiment across the electric vehicle sector in the U.S. stock market. Additionally, selling pressure emerged across related industries such as the secondary battery sector.

Tesla lowered its Q4 delivery forecast, citing production and delivery impacts from COVID-19 on Nio. As a result, Tesla closed down sharply by 11.41%. Chinese electric vehicle stocks such as Xiaopeng (-2.58%) and Li Auto (-1.23%) also fell together. U.S. electric vehicle stocks including Rivian (-7.31%), Nikola (-8.78%), Lordstown Motors (-7.89%), electric charging sector stocks like Blink Charging (-8.05%), Fisker (-5.98%), and secondary battery sector stocks such as QuantumScape (-7.50%), Albemarle (-5.64%), as well as lithium-related stocks mostly declined. The weakness of related stocks in the domestic market is also expected to impact the index.

The rise in government bond yields, which caused most tech stocks to weaken, is another burden on the domestic stock market. This was influenced by the inflation concerns highlighted after the Chinese government announced its 'With COVID' policy the previous day. China's 'With COVID' policy is a factor for increased exports from Korea to China, but some of this was already reflected the previous day. Therefore, it is considered unlikely to act as a strong positive factor, contributing to weakened investor sentiment.

Meanwhile, the Korea Exchange's announcement of the 'theoretical cash dividend adjustment index' is also a burden. The Korea Exchange annually releases this index assuming that the dividend amount on the day before the ex-dividend date is the same as the previous year, indicating the expected price decline. Considering this, a lower start for the domestic stock market is inevitable.

However, on average, considering selling to avoid major shareholder requirements followed by repurchasing, the opening price tends to form at a level higher than the ex-dividend price. Also, the closing price was higher than the opening price. Taking this into account, the decline after the market opens is expected to narrow.

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