Global Financial Markets 'Corona Monday'

KOSPI Falls 4% on Foreigners' Net Selling
Japan Nikkei Down 1.95%... Falls Below 20,000 Intraday

US Dow Jones Futures Drop 4.0%
US Treasury Yields Hit Record Lows Again

[Asia Economy Reporters Kwon Jae-hee and Lee Min-ji] As the novel coronavirus infection (COVID-19) entered a global 'pandemic' phase, Asian stock markets faced another 'Black Monday' on the 9th. In the domestic market, the KOSPI index plunged below the 2000-point mark again due to selling pressure from foreigners and institutions, while Japan's Nikkei 225 index broke below the 20,000 level for the first time in 1 year and 2 months. U.S. Treasury yields also hit new all-time lows once again.

[Image source=EPA Yonhap News]

On this day, the KOSPI opened at 1981.02, down 2.90% (59.20 points) from the previous trading day. As of 11:17 a.m., it recorded 1958.33, down 4.01% (81.89 points). As of 1:30 p.m., foreigners and institutions had net sold 958.7 billion KRW and 182.2 billion KRW respectively, while individual investors purchased 1.0876 trillion KRW worth of stocks.

Foreign investors have maintained a net selling trend on all but one of the last 11 trading days (except on the 4th). During this period, foreign investors sold more than 6 trillion KRW in the domestic stock market.

At the same time, Samsung Electronics traded at 54,100 KRW, down 4.25% from the previous day, while SK Hynix (-5.40%), Naver (-5.85%), LG Chem (-5.62%), Hyundai Motor (-4.89%), and Samsung SDI (-6.32%) also declined. Samsung Biologics was the only stock to rise, increasing by 0.2%.

The KOSDAQ index also fell, showing 620.58 at 1:30 p.m., down 3.44% (22.14 points) from the previous day. Foreigners and institutions net sold 110.9 billion KRW and 39.3 billion KRW respectively, while individual investors net bought 158.5 billion KRW. Representative stocks such as HL Biopharma (-4.2%), CJ ENM (-3.59%), Pearl Abyss (-3.77%), and Studio Dragon (-3.50%) declined.

Seo Sang-young, a researcher at Kiwoom Securities, explained, "The number of COVID-19 cases has surged significantly in the U.S., Italy, and other European countries, increasing market volatility. Additionally, Russia's refusal to cut production within the Organization of the Petroleum Exporting Countries (OPEC) led to a sharp drop in international oil prices, which is believed to have dampened investor sentiment."

In the Tokyo stock market, the Nikkei 225 index started the day with a sharp decline. The Nikkei 225 opened at 20,345.29, down 1.95% (404.46 points), but soon fell below the 20,000 level during the session. As of 1 p.m., the Nikkei 225 was trading at 19,585.48. This is the first time in 1 year and 2 months since January 7 of last year that the Nikkei average has fallen below 20,000 during trading hours. The Shanghai Composite Index also opened at 2,987.18, down 1.56% from the previous day.

On the New York Stock Exchange, Dow Jones Industrial Average futures fell 4.00% (1,032 points). Amid a flight to safe-haven assets, the yield on the U.S. 10-year Treasury note dropped by 0.248 percentage points to 0.519%, continuing its record low streak. As COVID-19 fears spread, U.S. Treasury yields have been hitting new all-time lows daily. In addition to COVID-19 fears, the failure of OPEC and the OPEC+ coalition (including non-member countries) to agree on production cuts has triggered an all-out oil price war, shocking the market. A decline in bond yields means bond prices are rising.

Global investment banks (IBs) have forecasted that recovery will be difficult until the end of this year if the COVID-19 pandemic coincides with a major recession. CNBC reported, "Asian stock markets have fallen sharply due to the oil price crash, and the increased market volatility caused by existing fears over the spread of COVID-19 also contributed."