Impact of Rising Interest Rates and Sharp Currency Fluctuations
Shanghai Composite Index Falls Over 2%
"KOSPI Faces Increased Downward Pressure"
[Asia Economy Reporter Minji Lee] The KOSPI failed to maintain the 3000-point level. On the 8th, the KOSPI closed at 2996.11, down 1% (30.15 points) from the previous trading day. The index opened at 3031.99, up 0.19% (5.73 points) from the previous day, buoyed by the positive performance of the U.S. stock market last Friday, rising nearly 1%, but the decline in the Chinese stock market, which focuses on tech stocks, widened the losses in the afternoon.
On this day, individual investors alone bought stocks worth 521.5 billion KRW, defending against the index decline. Foreigners and institutions sold stocks worth 125.6 billion KRW and 376.7 billion KRW, respectively.
Although last month's U.S. employment data came out better than market expectations, raising hopes for economic recovery, the domestic stock market soon turned downward due to the increased burden of rising government bond yields. Additionally, the Chinese stock market plunged after Ning Jizhe, Vice Chairman of the National Development and Reform Commission, made negative remarks that the foundation for China's economic recovery is not yet solid and that risks arising overseas must be addressed, which appeared to widen the decline in the domestic market as well. The won-dollar exchange rate rose to the 1130 won level due to the combination of a strong dollar and weak yuan, further weakening foreign demand.
In the domestic stock market on this day, steel companies reflecting economic recovery expectations and financial sectors expected to benefit from rising interest rates showed strength. POSCO (2.23%), Hyundai Steel (3.24%), KB Financial Group (6.28%), Shinhan Financial Group (3.68%), Hana Financial Group (3.63%), Samsung Fire & Marine Insurance (2.73%), and Woori Financial Group (3.12%) all rose compared to the previous day.
Among the top market capitalization stocks, Samsung Electronics recorded a 0.12% decline to 82,000 KRW. SK Hynix (-3.21%), NAVER (-2.38%), Hyundai Motor (-1.91%), Samsung SDI (-3.31%), Kakao (-3.61%), and Celltrion (-3.48%) also fell.
The KOSDAQ index closed at 904.77, down 2.03% (18.71 points) from the previous trading day. The index opened at 925.19, up 0.19% (1.71 points) from the previous day, but quickly turned downward and widened the decline. On this day, individual investors alone bought stocks worth 206.5 billion KRW. Foreigners and institutions sold stocks worth 178.6 billion KRW and 18.3 billion KRW, respectively.
Among the top market capitalization stocks, Celltrion Healthcare (-4.33%), Celltrion Pharm (-3.55%), Pearl Abyss (-3.38%), Kakao Games (-1.96%), and Alteogen (-4.85%) also declined.
Lee Kyung-min, a researcher at Daishin Securities, said, "The mid- to long-term outlook of economic recovery remains valid, but concerns about interest rates and exchange rates, which the market is currently focusing on, have been significantly reflected in the stock market. For the time being, the stock market is expected to be sensitive to changes in interest rates and exchange rates," adding, "At present, it is a time to be cautious of the possibility that downward pressure may increase rather than a reversal to an upward trend."
He continued, "A test of support at the 3000-point level is expected, and if it breaks downward, additional volatility will likely expand."
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