KOSPI Falls Below 2600 Amid Worsening Chinese Economic Indicators and BOK Big Step Remarks... KOSDAQ Slightly Rises

[Image source=Yonhap News]

[Asia Economy Reporter Myung-Hwan Lee] On the 16th, the KOSPI fell below the 2600 mark again due to worsening economic indicators in China and remarks from the Bank of Korea hinting at an interest rate hike. Foreigners and institutions sold large volumes, accelerating the index's decline. The KOSDAQ, which had risen more than 1% in the morning session, also gave up some of its gains by the close of trading.

On the 16th, the KOSPI closed at 2596.58, down 0.29% (7.66 points) from the previous trading day. The KOSPI opened at 2624.69, up 0.79% (20.45 points) from the previous day, then gradually reduced its gains before turning negative during the morning session. It then remained flat before closing below 2600. Looking at trading participants, individuals were the sole net buyers with 64.5 billion KRW, while foreigners and institutions sold 17.3 billion KRW and 100.8 billion KRW respectively.

Seok-Hwan Kim, a researcher at Mirae Asset Securities, analyzed the market by saying, "The KOSPI started higher due to a rebound in the US stock market and expectations of easing Shanghai lockdowns, but turned negative due to shocks from China's real economy indicators and the Bank of Korea's mention of a big step rate hike. Only individuals bought futures, while foreigners maintained a selling trend, limiting the index's rise."

The economic indicators released on the 16th from China were worse than expected, affecting investor sentiment. According to China's National Bureau of Statistics, retail sales in China last month fell 11.1% compared to the same month last year, a larger drop than major foreign media forecasts. Retail sales of consumer goods excluding automobiles also decreased by 8.4% year-on-year.

Remarks by Lee Chang-yong, Governor of the Bank of Korea, hinting at an interest rate hike also had an impact. After a breakfast meeting with Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho at the Press Center in Jung-gu, Seoul, Lee told reporters, "It is not yet the stage to completely rule out the possibility of a big step (a 0.5 percentage point hike in the base rate at once)."

Looking at the top market capitalization stocks on the KOSPI, Samsung Electronics closed at 66,300 KRW, down 0.30% (200 KRW) from the previous day. Most major stocks fell, including ▲SK Hynix (-1.78%) ▲Samsung Biologics (-1.91%) ▲Naver (-0.36%) ▲Samsung SDI (-0.34%) ▲Hyundai Motor (-1.34%) ▲LG Chem (-0.59%). On the other hand, Samsung Electronics Preferred shares (1.03%) and Kakao (0.61%) closed higher. LG Energy Solution ended at the same price as the previous trading day, 405,000 KRW.

By sector, reopening-related industries such as textiles and apparel (3.03%), food and beverages (1.38%), and paper and wood products (1.16%) showed strength. Meanwhile, telecommunications (-2.66%), pharmaceuticals (-1.25%), and medical precision (-1.14%) declined.

The KOSDAQ index closed at 856.25, up 0.37% (3.17 points) from the previous day. The KOSDAQ opened at 862.24, up 1.07% (9.16 points), and at one point in the morning session rose more than 1%, but gave up some gains in the afternoon. By investor type, individuals and institutions bought 6 billion KRW and 10.9 billion KRW respectively, while foreigners sold 21 billion KRW.

Among the top 10 market capitalization stocks on the KOSDAQ, HLB posted the largest gain, closing at 44,300 KRW, up 4.24% (1,800 KRW) from the previous day. Others that closed higher included ▲L&F (3.07%) ▲Kakao Games (0.18%) ▲Cheonbo (1.96%). Meanwhile, ▲Celltrion Healthcare (-1.28%) ▲Pearl Abyss (-1.37%) ▲Celltrion Pharm (-1.83%) ▲Rino Industrial (-0.12%) ▲Studio Dragon (-1.50%) declined. EcoPro BM, the largest market cap stock on the KOSDAQ, ended at the same price as the previous day, 449,500 KRW.

By sector, food and tobacco (5.94%) and transportation equipment and parts (2.40%) rose, while semiconductors (-0.76%) and other manufacturing (-0.56%) declined.