Stock Market Sensitive to Volatility... KOSPI Gains Narrowed Amid China's Tightening Concerns

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] On March 2, the first trading day of the month, the stock market closed higher. Early in the session, the market surged significantly on news of easing U.S. Treasury yields and the House of Representatives passing a stimulus bill, but gains were capped in the afternoon amid concerns over tightening in China.

The KOSPI index closed at 3,043.87, up 30.92 points (1.03%) from the previous session. While individual investors sold a net 633.3 billion KRW, foreigners and institutions bought net amounts of 214.9 billion KRW and 442 billion KRW, respectively.

Individual investors, who had sold nearly 1 trillion KRW at one point during the session, joined the buying momentum in the latter part of the day, while foreign net purchases decreased from the afternoon. The Chinese financial authorities’ concerns about a financial market bubble and the possibility of fiscal tightening are interpreted as factors dampening investor sentiment. Lee Jin-woo, head of investment strategy at Meritz Securities, said, "Concerns over overheating in China’s financial markets have impacted not only Korea but also Asian stock markets. With increased volatility and profit-taking sentiment, market sensitivity remains high ahead of China’s National People's Congress (NPC), the country’s highest decision-making body."

Among the top 10 companies by market capitalization, LG Chem recorded the largest gain, rising 7.22% to 891,000 KRW compared to the previous session. Most stocks, including SK Hynix (+2.12%), Samsung SDI (+1.48%), and Samsung Electronics (+1.33%), showed strength, while only Celltrion (-2.02%) declined. The growth potential in the electric vehicle market and the re-ignition of the semiconductor supercycle issue are analyzed as driving the gains in the electronics and chemical sectors.

The KOSDAQ index closed at 923.17, up 9.23 points (1.01%) from the previous session. Individual investors sold a net 119.4 billion KRW, while foreigners and institutions bought net amounts of 56.8 billion KRW and 64.4 billion KRW, respectively.

Among the top 10 KOSDAQ stocks by market capitalization, all except Celltrion Healthcare (-0.32%) and Kakao Games (-1.85%) showed gains. In particular, HL Biopharma (4.81%) and Seegene (2.89%) outperformed the index’s rise.

Lee Kyung-min, head of investment strategy at Daishin Securities, said, "With U.S. Treasury yields stabilizing downward, the domestic stock market is showing an upward trend. It appears that the previously suppressed bullish momentum in the domestic market is now being unleashed."