Impact of US Stock Market Decline Due to COVID-19 Concerns... KOSPI Down Over 1%

KOSPI Index Drops to 3172.26 in the Morning
KOSDAQ Also Shows Slight Decline

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The KOSPI is showing a decline of over 1%, failing to continue the previous day's upward momentum. The drop is attributed to concerns over the resurgence of COVID-19 and the resulting decline in the U.S. stock market.

As of 11:10 a.m. on the 21st, the KOSPI stood at 3,174.32, down 1.44% (46.38 points) from the previous trading day. Earlier at 11:05 a.m., it had fallen to 3,172.26.

The decline in the U.S. stock market appears to be negatively impacting the domestic market as well. According to the New York Stock Exchange on the 20th (local time), the Dow Jones Industrial Average closed at 33,821.30, down 0.75% (256.33 points) from the previous day. The S&P 500 index fell 0.68% (28.32 points) to 4,134.94, and the Nasdaq index closed down 0.92% (128.50 points) at 13,786.27.

The U.S. stock market decline seems to be driven by concerns over the resurgence of COVID-19 and the burden of high valuations. Although the U.S. is expanding vaccination efforts, the seven-day average of new COVID-19 cases still reaches 67,000. Osaka, Japan, is preparing to announce a state of emergency due to COVID-19, and reports indicate that Tokyo is expected to request the government to declare a state of emergency this week.

Seosangyoung, a researcher at Mirae Asset Securities, explained, "The U.S. stock market declined mainly in economically sensitive stocks and sectors such as industrials, financials, travel, and leisure due to the spread of COVID-19 in Japan and the U.S. government's announcement of overseas travel restrictions." He added, "Untact-related stocks also weakened due to profit-taking, which widened the decline." However, defensive sectors such as essential consumer goods and utilities showed strength, limiting the overall drop.

In the KOSPI market, selling pressure from foreigners and institutions is stronger than the buying power of individuals. Foreigners and institutions sold a net 442.6 billion KRW and 623.2 billion KRW, respectively, while individuals bought a net 1.0593 trillion KRW.

All sectors except paper and wood declined. The chemical sector had the largest drop at -1.63%, followed by precision medical instruments (-1.58%), insurance (-1.53%), transportation equipment (-1.49%), and textiles and apparel (-1.46%). The paper and wood sector rose by 1.78%.

All of the top 10 stocks by market capitalization fell by more than 1%. LG Chem had the largest decline at -2.69%, followed by Samsung SDI (-2.46%), Celltrion (-2.00%), NAVER (-1.79%), Samsung Biologics (-1.67%), Kia (-1.63%), Hyundai Motor (-1.53%), SK Hynix (-1.44%), Kakao (-1.26%), and Samsung Electronics (-1.19%).

At the same time, the KOSDAQ index recorded 1,023.20, down 0.84% (8.68 points) from the previous trading day. At 11:11 a.m., it fell to 1,022.91, showing a similar trend to the KOSPI.

Buying pressure from foreigners and institutions led to the index decline. Foreigners and institutions sold a net 63.5 billion KRW and 62.5 billion KRW, respectively, while individuals bought a net 146.1 billion KRW.

Almost all sectors declined. The retail sector had the largest drop at -1.38%, followed by semiconductors (-0.92%), general electrical and electronics (-0.83%), computer services (-0.83%), and broadcasting services (-0.76%). Meanwhile, telecommunications services (1.08%), transportation (0.96%), information devices (0.55%), telecommunications equipment (0.25%), and finance (0.25%) rose.

All of the top 10 stocks by market capitalization declined. SK Materials had the largest drop at -2.58%, followed by Pearl Abyss (-2.55%), Kakao Games (-2.43%), Alteogen (-2.32%), Celltrion Healthcare (-2.23%), Celltrion Pharm (-2.20%), CJ ENM (-1.48%), HLB (-1.14%), EcoPro BM (-0.43%), and Seegene (-0.24%).