KOSPI Falls Below 3000... Bio Stocks Plunge on Oral COVID-19 Treatment News

KOSDAQ Also Starts Lower... Decline Widens to Over 3%

The KOSPI fell below the 3,000 mark on the 5th, shown here at the Hana Bank dealing room in Jung-gu, Seoul. On this day, the KOSPI index opened at 2,998.17, down 21.01 points (0.70%) from the previous session. It is the first time in 6 months and 10 days since March 25 that the KOSPI has fallen below 3,000. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Gong Byung-sun] The KOSPI fell below the 3,000 mark for the first time in about six months. This is interpreted as a weakening of investor sentiment amid heightened uncertainty in U.S. politics.

According to the Korea Exchange, on the 5th, the KOSPI opened at 2,998.17, down 0.70% (21.01 points) from the previous day. This is the first time the KOSPI has fallen below 3,000 since March 25, when it dropped to 2,987.83. As of 10:20 a.m. that day, the KOSPI recorded 2,943.55, down 2.50% from the previous day.

The decline in the KOSPI was driven by foreign selling. Foreign investors sold a net 197.9 billion KRW. Individuals and institutions bought a net 138.4 billion KRW and 64.5 billion KRW, respectively.

Top market capitalization stocks also showed weakness, centered on bio stocks. It appears to have been influenced by the announcement from U.S. pharmaceutical company Merck that the efficacy of its oral COVID-19 treatment has been verified. Among the top 10 stocks by market capitalization, Celltrion's decline was the largest at 5.24%. This was followed by Samsung Biologics (-4.91%), Samsung SDI (-2.83%), Kakao (-2.58%), NAVER (-1.83%), Kia (-1.79%), LG Chem (-1.69%), SK Hynix (-1.50%), Hyundai Motor (-1.29%), and Samsung Electronics (-0.82%).

The KOSDAQ also failed to avoid sluggishness. On the same day, the KOSDAQ started trading at 974.24, down 0.91% (8.96 points) from the previous day. It has continued to underperform since falling below the 1,000 mark on the 1st. At the same time, the KOSDAQ recorded 952.60, down 3.11% from the previous day.

Sell-offs by individuals and foreigners led to the index decline. Individuals and foreigners sold a net 44.2 billion KRW and 9.2 billion KRW, respectively. Institutions also sold a net 55.1 billion KRW.

Among the top market capitalization stocks in the KOSDAQ, bio stocks also showed weakness. Among the top 10 stocks by market capitalization, Celltrion Healthcare's decline was the largest at 5.60%, followed by Celltrion Pharm at 4.86%. Kakao Games (-2.31%), Pearl Abyss (-1.99%), SK Materials (-1.11%), Alteogen (-0.70%), HLB (-0.36%), and EcoPro BM (-0.20%) also declined. CJ ENM (3.00%) and L&F (1.97%) rose.

Uncertainty in U.S. politics is also interpreted as affecting the domestic stock market. The vote on the Biden administration's $1.2 trillion (about 1,421.52 trillion KRW) infrastructure investment bill, which had been a tailwind for global stock markets, has been postponed to October 31. Progressive lawmakers argue that a $3.5 trillion social spending bill should be passed first, while moderate lawmakers such as Senator Joe Manchin are demanding cuts.

Seo Sang-young, a researcher at Mirae Asset Securities, explained, "The weakening of expectations for government fiscal spending and the heightened concerns over a U.S. credit rating downgrade lead to a contraction in investor sentiment," adding, "The Biden administration's tough stance on China, such as the U.S. Trade Representative's announcement to maintain tariffs on China, is also a burden."