[MarketING] The Second Wave of Massive Limit-Downs? Shrinking Investor Sentiment

KOSPI Turns Down After One Day, Drops Below 2620
KOSDAQ Falls Over 2%, Slides to 870 Level

The KOSPI turned bearish after a day and fell below the 2620 level. The KOSDAQ, which was close to the 900 mark, dropped more than 2% due to selling by foreigners and institutions, sliding down to the 870 level. This is interpreted as a result of weakened investor sentiment amid heightened caution ahead of the U.S. Federal Open Market Committee (FOMC) meeting in June, compounded by another wave of multiple stocks hitting their lower price limits.

KOSPI turns bearish after a day... KOSDAQ falls over 2%

On the 14th, the KOSPI closed at 2,619.08, down 18.87 points (0.72%) from the previous day. The KOSDAQ ended the session at 871.83, down 23.98 points (2.79%).

[Image source=Yonhap News]

Foreign and institutional selling pressure dragged the KOSDAQ down. In the KOSDAQ market that day, foreigners and institutions net sold 113.1 billion KRW and 128.2 billion KRW, respectively. Individuals bought 272.1 billion KRW, but it was insufficient to defend the index. The opposite trend was seen in the KOSPI market. Foreigners and institutions net bought 250.5 billion KRW and 6.4 billion KRW, respectively, while individuals sold 212.2 billion KRW.

Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "The secondary battery stocks, which had shown strength the previous day due to the news of inclusion in the Financial Times Stock Exchange (FTSE) Environmental Technology (ET) index, saw an expanded decline due to Goldman Sachs' sell recommendation and profit-taking." He added, "In particular, foreigners and institutions focused their net selling on the secondary battery sector, which holds a large market capitalization in the KOSDAQ."

On that day, EcoPro fell 10.95%, EcoPro BM 10.25%, and L&F 9.24%, leading to a sharp drop in the index. In the KOSPI market, secondary battery stocks also showed weakness, with LG Energy Solution down 2.97%, LG Chem 2.31%, Samsung SDI 1.48%, and POSCO Future M 5.09%.

Foreign and institutional selling was concentrated on these stocks. Foreigners sold EcoPro BM (105.9 billion KRW), EcoPro (69.5 billion KRW), and L&F (57.4 billion KRW) in that order. Institutions sold EcoPro the most with a net 51 billion KRW, followed by L&F (35.3 billion KRW), EcoPro BM (29.8 billion KRW), and POSCO Future M (21.9 billion KRW), ranking high among net sellers.

Goldman Sachs recently issued sell recommendations on EcoPro BM and POSCO Future M, setting a 12-month target price of 125,000 KRW for EcoPro BM and 220,000 KRW for POSCO Future M. As of the closing price that day, EcoPro BM was at 254,000 KRW, and POSCO Future M was at 373,000 KRW. Goldman Sachs pointed out that the cathode materials are almost similar in quality and that oversupply is expected for 10 years, indicating that the valuations of Korean companies are excessive.

Another wave of multiple stocks hitting lower price limits

On that day’s market, some stocks again hit their lower price limits in bulk, raising concerns about a second 'Soci?t? G?n?rale (SG) Securities-triggered crash.'

Four KOSPI-listed companies?Banglim, Dongil Industry, Manho Steel, and Daehan Textile?and one KOSDAQ stock, Dongil Metal, a total of five stocks, hit their lower price limits. They showed weakness in the morning and entered the lower price limit around noon.

The cause of the near-simultaneous sharp decline of these stocks has not been identified, but some in the market are raising suspicions of stock price manipulation similar to the previous SG Securities-triggered crash.

The Financial Supervisory Service (FSS) has begun an investigation into whether unfair trading occurred related to these five stocks hitting their lower price limits at similar times.

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