KOSPI Ends with Precarious Rise... Impact of Ukraine

KOSPI Shows Mixed Trends but Closes Higher
KOSDAQ Falls Amid Ukraine Impact

On the 16th, when the KOSPI index started higher due to significantly eased concerns over Russia's invasion of Ukraine, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] On the 17th, the KOSPI closed higher after showing mixed trends amid ongoing concerns about the possibility of war between Russia and Ukraine.

On that day, the KOSPI closed at 2,744.09, up 14.41 points (0.53%) from the previous session. Although the upward trend was maintained, the market showed a precarious stance throughout the day.

In particular, around 1 p.m., after reports citing the Joint Control and Coordination Commission (JCCC) stated that the Ukrainian military launched mortar and grenade attacks on four areas in the Luhansk Republic, a pro-Russian rebel-controlled region, the market experienced a sharp decline.

However, since the area was already a conflict zone, the KOSPI reversed to an upward trend. The main drivers of the rise that day were foreign investors and institutions, who net purchased 651 billion KRW and 433.1 billion KRW respectively. Meanwhile, individual investors took the rare opportunity for profit-taking and sold stocks worth 1.0966 trillion KRW.

Kim Seokhwan, a researcher at Mirae Asset Securities, analyzed, "The stock market rose on the assessment that the Federal Reserve is unlikely to implement aggressive monetary policies at next month's Federal Open Market Committee (FOMC) meeting, but volatility increased due to news of shelling in pro-Russian areas of Ukraine."

KOSPI Closes Higher

Among all stocks, 460 ended the day higher. Among the top market capitalization stocks, the leading stock Samsung Electronics closed up 0.27% at 75,000 KRW. The stock price rose as foreign and institutional investors continued net buying.

On the other hand, LG Energy Solution, the leader in secondary batteries, closed lower, down 0.22% at 454,000 KRW. LG Energy Solution announced the acquisition of NEC Energy Solutions, a U.S. energy storage system integration (ESS SI) specialist company. Although this is the first merger and acquisition (M&A) case since its spin-off from LG Chem, the market reaction was lukewarm as foreign investors continued net selling.

Among the top 10 market cap stocks, Samsung SDI showed the largest gain, closing up 3.15% at 557,000 KRW. Both foreign and institutional investors bought net, driving the stock price up. Meanwhile, growth stocks NAVER closed unchanged at 324,500 KRW, and Kakao closed down 1.41% at 90,600 KRW.

On that day, Heung-A Shipping, Korea Iron & Steel, and Sunjin Beauty Science hit the daily upper limit. Along with Heung-A Shipping’s rise, HMM also rose 10.10%, making the transportation and warehousing sector the best performing sector with a 2.90% increase. Both companies’ stock prices surged on expectations that the logistics crisis will continue. Korea Investment & Securities recently reported, "The logistics crisis benefit in the shipping market will continue this year as well," adding, "The average SCFI (Shanghai Containerized Freight Index) for the first quarter is 8% higher than the fourth quarter. Considering the time lag reflected in earnings, profits are expected to continue in the first quarter." By sector, besides transportation and warehousing, finance, machinery, and chemicals rose more than 0.5%.

KOSDAQ Lacks Late-Session Strength

The KOSDAQ also fluctuated throughout the day due to geopolitical impacts but failed to muster late-session strength and closed lower. It ended at 874.22, down 0.45% from the previous session. Although institutions led the index higher with net buying of 30.3 billion KRW, individual investors (8.8 billion KRW) and foreign investors (21.2 billion KRW) had larger profit-taking volumes.

Among all sectors, 582 stocks rose. However, most of the top market cap stocks closed lower. Celltrion Healthcare rose 1.94%, and EcoPro BM increased 2.28%, but the rest declined. Notably, gaming stocks showed a downward trend. Pearl Abyss fell 4.85%, and Kakao Games (1.95%) and Wemade (0.46%) also declined.

By sector, only distribution showed a rise in the 1% range, while medical precision and computer services sectors maintained upward trends. In distribution, stocks like AutoN (23.99%) and Jungang Enervis (12.11%) surged, contributing to the sector’s gains.

The USD/KRW exchange rate closed at 1,197.10 KRW, down 0.04% from the previous day. In the morning, it fell to 1,194 KRW due to improved risk appetite and foreign investors’ net buying in the domestic stock market, but during the session, the dollar surged to 1,201 KRW amid the Ukraine issue.