KOSPI Falls Below 2600 Amid Three Consecutive Days of Foreign Selling... Caution Rises Ahead of Powell's Remarks

by Kwon Jaehee

Published 21 Jun.2023 16:30(KST)

On the 21st, the KOSPI index closed below the 2600 mark as caution spread ahead of Federal Reserve (Fed) Chair Jerome Powell's congressional testimony.

On that day, the KOSPI index closed at 2582.63, down 0.86% (22.28 points) from the previous session. The index opened at 2599.19, down 0.22% (5.72 points) from the previous close, but gradually widened its losses, retreating to the 2580 level during the session.

This is the first time since the 1st (2569.17) that the KOSPI index closed below 2600.

By investor type, foreigners and institutions sold stocks worth 405.1 billion KRW and 208.3 billion KRW, respectively. Foreigners have maintained a net selling position for three consecutive trading days since the 19th, and institutions for six consecutive trading days since the 14th.

On this day, the KOSPI showed a limited movement amid increased cautious sentiment ahead of Chair Powell's congressional testimony.

Chair Powell is scheduled to appear before Congress on the 21st and 22nd (local time) to deliver the semiannual monetary policy report.

Since the recent June Federal Open Market Committee (FOMC) meeting suggested the possibility of further rate hikes, market participants are keenly watching for any hints Powell might give regarding future interest rate increases.

Additionally, given the recent sharp rise of the KOSPI to the 2650 level, some analysts interpret the current market as a 'breather' phase.

Lee Kyung-min, a researcher at Daishin Securities, explained, "This is a short-term process to relieve overheating pressure, and the market is continuously digesting selling pressure. Also, the recent weakening of market expectations regarding China's economic stimulus is acting as a negative factor for investor sentiment."

Among the top 10 KOSPI market capitalization stocks, Hyundai Motor (3.08%) and Kia (2.69%) showed strength after unveiling the 'Hyundai Motorway' strategy at the previous day's Investor Day, which includes plans to sell 2 million electric vehicles by 2030.

[Image source=Yonhap News]

All other stocks closed lower. Samsung Electronics (-1.26%), LG Energy Solution (-0.53%), SK Hynix (-0.86%), Samsung Biologics (-1.56%), LG Chem (-2.17%), Samsung Electronics Preferred (-0.50%), Samsung SDI (-1.00%), and POSCO Holdings (-0.91%) all declined.

By sector, all sectors closed lower except transportation equipment (1.50%), insurance (1.39%), securities (0.67%), and non-metallic minerals (0.57%). The sectors that declined include medical precision (-3.74%), textiles and apparel (-2.14%), transportation and warehousing (-2.06%), chemicals (-1.68%), services (-1.63%), pharmaceuticals (-1.37%), and machinery (-1.26%).

The KOSDAQ index opened at 875.26, down 1.21% (10.71 points) from the previous session. It rose to as high as 890.94 during the morning session but then reversed and extended losses, falling to the 870 level.

By investor type, individuals were the sole net buyers with purchases worth 282 billion KRW. Foreigners and institutions showed net selling positions of 186.7 billion KRW and 80.6 billion KRW, respectively.

All top KOSDAQ market capitalization stocks closed lower. These include EcoPro BM (-0.19%), EcoPro (-0.39%), Celltrion Healthcare (-2.30%), L&F (-3.34%), JYP Ent. (-3.17%), HLB (-1.40%), Pearl Abyss (-1.93%), Celltrion Pharm (-2.77%), and Kakao Games (-2.19%).

By sector, all sectors declined except transportation equipment parts (1.44%), non-metallic minerals (1.26%), and publishing and printing (0.89%). Declining sectors include broadcasting services (-2.81%), paper and wood (-2.34%), telecommunications and broadcasting services (-2.27%), entertainment and culture (-2.18%), semiconductors (-2.10%), telecommunications equipment (-1.94%), and digital content (-1.79%).