Fed-Driven Tightening Shock Avoided... KOSPI Shows Slightly Firm Trend

KOSDAQ Surpasses 1010 Level... Strong Foreign Buying Momentum

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The domestic stock market is holding steady despite the U.S. Federal Reserve's (Fed) indication of early tightening. The KOSPI, supported by individual buying, showed a firm upward trend.

As of 11:13 a.m. on the 18th, the KOSPI rose 0.11% (3.63 points) from the previous trading day to 3,268.59. It even climbed to 3,275.76 at 9:26 a.m. that day.

The domestic stock market appears largely unaffected by the hawkish Fed. Seosangyoung, a researcher at Mirae Asset Securities, explained, "Although the Federal Open Market Committee (FOMC) mentioned early tightening yesterday, the KOSDAQ surpassed 1,000 due to net buying by foreigners and the strong Shenzhen index in China. The market was not influenced by the hawkish Fed remarks, unlike during the 2013 taper tantrum and the gradual rate hikes in 2015."

Back in 2013, when former Fed Chairman Ben Bernanke said, "If we see labor market improvements and are confident they will continue, we may reduce asset purchases in several upcoming meetings," the dollar and Treasury yields surged sharply. In 2015, then Fed Chair Janet Yellen, now Treasury Secretary, mentioned rate hikes, marking the end of the large-scale quantitative easing policy that had continued since the 2008 subprime mortgage crisis.

Individual buying led to a firm upward trend. Individuals net purchased 358.9 billion KRW. Foreigners and institutions net sold 261 billion KRW and 88.6 billion KRW, respectively.

Most sectors declined. The paper and wood sector fell the most, down 1.02%. This was followed by transportation and warehousing (-0.97%), banking (-0.96%), steel and metals (-0.86%), and insurance (-0.84%). Meanwhile, textile and apparel (2.40%), medical precision instruments (0.77%), non-metallic minerals (0.71%), transportation equipment (0.46%), and electrical and electronics (0.09%) rose.

Many of the top 10 market capitalization stocks showed gains. Kakao led with a 4.73% increase, extending its lead over NAVER with two consecutive days of gains. Samsung SDI rose 3.69%, NAVER 2.57%, Kia 0.80%, Celltrion 0.37%, Hyundai Motor 0.21%, and Samsung Biologics 0.12%. LG Chem (-1.08%), SK Hynix (-0.79%), and Samsung Electronics (-0.25%) declined.

At the same time, the KOSDAQ rose 0.98% (9.80 points) from the previous trading day to 1,013.52. It reached 1,013.67 at 11:12 a.m. that day.

Foreign buying was strong. Foreigners net purchased 141.6 billion KRW. Individuals and institutions net sold 128.7 billion KRW and 3.5 billion KRW, respectively.

Almost all sectors showed strength. Telecommunications equipment rose the most at 2.83%, followed by transportation equipment and parts (2.50%), paper and wood (1.54%), IT parts (1.49%), and general electrical and electronics (1.45%). Broadcasting services (-0.63%), telecommunications and broadcasting services (-0.40%), construction (-0.38%), finance (-0.29%), and information devices (-0.25%) declined.

Most of the top 10 market capitalization stocks rose. HL Biotech led with an 8.68% increase, followed by Alteogen (3.44%), Celltrion Pharm (2.68%), EcoPro BM (2.56%), SK Materials (2.44%), Seegene (1.74%), Pearl Abyss (1.41%), and Celltrion Healthcare (0.85%). Kakao Games (-0.54%) and CJ ENM (-0.51%) declined.