Institutions and Foreigners 'Sell Off' Push KOSPI Down to 3140 Level... "Expect Gradual Domestic Demand Recovery"

KOSDAQ Falls to 975 Intraday, Showing Over 1% Decline
"Service Sector Expected to Join Momentum Following Manufacturing"

On the 21st, as the spread of COVID-19 continues, medical staff at a temporary screening clinic set up in Guro Station Plaza, Seoul, are guiding citizens and foreigners on social distancing. Photo by Moon Honam munonam@

[Asia Economy Reporter Gong Byung-sun] Selling pressure from institutions and foreigners led to a decline in the KOSPI index.

On the 30th, the KOSPI closed at 3,147.86, down 0.83% (26.21 points) from the previous trading day. It even fell to 3,143.38 at 1:56 PM that day.

Institutions and foreigners showed strong selling pressure. Institutions and foreigners net sold 791.1 billion KRW and 558.1 billion KRW, respectively. Individuals bought 201 billion KRW.

Most sectors declined. The construction sector had the largest drop at 3.26%. This was followed by steel and metals (-2.81%), medical precision (-1.92%), non-metallic minerals (-1.59%), and services (-1.35%). Securities (2.21%), banking (1.72%), transportation and warehousing (0.50%), finance (0.30%), and textiles and apparel (0.04%) rose.

Almost all of the top 10 market capitalization stocks fell. Kakao had the largest decline at -2.99%. This was followed by Samsung SDI (-2.68%), Hyundai Motor (-2.53%), POSCO (-2.41%), LG Chem (-2.00%), NAVER (-1.91%), SK Hynix (-1.54%), Celltrion (-0.93%), and Samsung Electronics (-0.24%). Samsung Biologics rose by 0.50%.

On the same day, the KOSDAQ closed at 983.45, down 0.73% (7.24 points) from the previous trading day. It fell to 975.66 at 1:58 PM, showing a decline of over 1% at one point.

Again, selling pressure from foreigners and institutions led to the index decline. Foreigners and institutions sold 26.5 billion KRW and 9 billion KRW, respectively. Individuals net bought 43.2 billion KRW.

Almost all sectors declined. The computer services sector had the largest drop at -2.98%. This was followed by paper and wood (-2.14%), digital content (-1.88%), IT software & services (-1.59%), and publishing and media replication (-1.42%). Broadcasting services (1.03%), telecommunications and broadcasting services (0.48%), entertainment and culture (0.16%), information devices (0.15%), and IT components (0.10%) rose.

Many of the top 10 market capitalization stocks declined. Alteogen had the largest drop at -2.65%. This was followed by Celltrion Pharm (-2.28%), Kakao Games (-0.73%), Pearl Abyss (-0.53%), HLB (-0.30%), Celltrion Healthcare (-0.09%), and EcoPro BM (-0.06%). Studio Dragon (2.68%), CJ ENM (2.13%), and SK Materials (0.21%) rose.

The momentum for economic improvement remains valid. In Korea, it is expected that the service sector will join the manufacturing sector in momentum. This is because vaccine distribution efforts in the US and Europe are supporting steady demand for manufacturing, and gradual easing of social distancing measures is anticipated. Kim Chan-hee, a researcher at Shinhan Financial Investment, said, “The leading index cyclical component has risen for 10 consecutive months compared to the previous month, and improvements in financial, psychological, and real indicators are also ongoing. Although uncertainties such as potential production disruptions due to shortages of automobile parts and a resurgence of COVID-19 remain in the manufacturing sector, the improvement trend is expected to continue.”