KOSPI Falls Below 3,000 Amid Consecutive Negative Developments in US and China

US Biden Administration's Infrastructure Bill Vote Delayed to Late October
Trading of China's Major Real Estate Firm Evergrande Group Temporarily Halted on Hong Kong Stock Exchange
KOSDAQ Falls to 950 Level

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

[Asia Economy Reporter Gong Byung-sun] The KOSPI index fell below the 3000 mark for the first time in six months. It is interpreted that the continuous negative factors occurring in the US and China are affecting the domestic stock market.

As of 11:27 AM on the 5th, the KOSPI recorded 2947.85, down 2.36% (71.33 points) from the previous day. This is the first time the KOSPI has fallen below 3000 since March 25, about six months ago. It even dropped to 2940.59 as of 10:34 AM on the same day.

Negative news continues to emerge from the US and China. The $1.2 trillion (approximately 1421.52 trillion KRW) infrastructure investment bill by the Biden administration, which had been boosting global stock markets, has been postponed to October 31 due to congressional conflicts. Additionally, trading of China’s real estate company Evergrande Group was temporarily suspended on the Hong Kong stock market. The reason has not yet been disclosed. Evergrande reportedly failed to pay bond interest due on the 23rd and 29th of last month, and another bond’s effective maturity has also arrived.

Seo Sang-young, a researcher at Mirae Asset Securities, explained, “The entire Asian market was affected by US political uncertainties and the suspension of Evergrande Group trading on the Hong Kong stock market,” adding, “Concerns over monopolies of platform companies like Facebook have intensified antitrust issues in the US and Europe, which also burdens domestic companies.”

Foreigners are selling heavily. Foreign investors net sold 277.1 billion KRW. Individuals and foreigners net bought 191.6 billion KRW and 84.9 billion KRW, respectively.

Most sectors declined. Pharmaceuticals saw the largest drop at 6.38%. This was followed by banks (-5.51%), paper and wood (-3.19%), electrical and electronics (-2.61%), and manufacturing (-2.59%). Textiles and apparel (0.27%) and medical precision instruments (0.01%) rose.

All of the top 10 stocks by market capitalization showed weakness. The announcement by US pharmaceutical company Merck that the efficacy of its oral COVID-19 treatment was verified is interpreted to have negatively impacted major pharmaceutical stocks. Celltrion’s decline was the largest at 8.67%. This was followed by Samsung Biologics (-5.94%), Samsung SDI (-5.09%), Kakao (-4.72%), LG Chem (-3.77%), SK Hynix (-2.70%), Kia (-2.30%), Samsung Electronics (-2.19%), NAVER (-2.09%), and Hyundai Motor (-1.03%).

At the same time, the KOSDAQ index recorded 953.32, down 3.04% (29.88 points) from the previous day. It also fell to 950.09 as of 10:32 AM on the same day.

Sales by individuals and foreigners led to the index decline. Individuals and foreigners net sold 59.3 billion KRW and 11.8 billion KRW, respectively. Institutions net bought 75.1 billion KRW.

Almost all sectors declined. Distribution saw the largest drop at 4.96%, followed by pharmaceuticals (-4.93%), information devices (-4.32%), telecommunications services (-3.91%), and publishing and media replication (-3.86%). Entertainment and culture (1.71%) and digital content (0.17%) rose.

Most of the top 10 stocks by market capitalization fell. Celltrion Healthcare’s decline was the largest at 8.20%, followed by Celltrion Pharm (-6.86%), HL Biopharma (-3.96%), EcoPro BM (-2.86%), Kakao Games (-2.47%), Alteogen (-1.40%), SK Materials (-1.33%), and Pearl Abyss (-0.82%). CJ ENM (1.87%) and L&F (0.60%) rose.