KOSPI Turns Flat Amid Lee Chang-yong Governor's Hawkish Remarks... Institutional Investors Return to Net Selling

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] On the morning of the 26th, the KOSPI, which had been on the rise, turned to a slight decline in the afternoon session. This is presumed to be the aftermath of Bank of Korea Governor Lee Chang-yong’s hawkish remarks suggesting a possible additional interest rate hike. Institutions, which had been net buyers in the morning session, switched to selling.

As of 1:37 PM on the day, the KOSPI stood at 2615.96, down 0.05% (1.26 points) from the previous trading day. The KOSPI opened at 2616.99, down 0.01% (0.23 points) from the previous day, and gained momentum in the morning session but weakened in the afternoon, turning to a sideways trend. By trading participants, individuals and foreigners bought 20.7 billion KRW and 12.8 billion KRW respectively, while institutions alone sold 47.2 billion KRW net.

Governor Lee said at a press conference held immediately after the Financial Monetary Policy Committee (FOMC) regular meeting, "Monetary policy will be operated focusing on inflation for the next several months," adding, "We currently assess that inflation risks are significant." This is interpreted as a statement implying the possibility of an additional base interest rate hike.

Prior to Governor Lee’s remarks, the FOMC raised the base interest rate from 1.5% to 1.75%, an increase of 0.25 percentage points, in the morning session. Along with the rate hike, the committee also revised upward this year’s inflation forecast from 3.1% to 4.5%. This is the highest level in 14 years (since July 2011), reflecting the prolonged Ukraine war and significant increases in major raw material prices due to supply chain disruptions.

Top market capitalization stocks on the Korea Stock Exchange are showing mixed performances. LG Energy Solution is trading up 0.70% (3,000 KRW) at 429,500 KRW, along with gains in ▲Samsung Biologics (0.96%), ▲Naver (0.38%), ▲Hyundai Motor (0.82%), and ▲LG Chem (0.19%). Conversely, SK Hynix is down 2.31% (2,500 KRW) at 105,500 KRW. Other decliners include ▲Samsung Electronics (-0.15%), ▲Samsung SDI (-1.19%), and ▲Kakao (-0.24%). Samsung Electronics Preferred shares are unchanged at 59,800 KRW.

By sector, most sectors are rising, with the banking sector up 1.13%, likely influenced by the FOMC’s rate hike decision. The electric and gas utilities sector also rose 1.51%. On the other hand, food and beverages (-0.71%) and insurance (-0.49%) sectors declined.

At the same time, the KOSDAQ index is at 877.19, up 0.52% (4.50 points) from the previous trading day. The index opened at 876.19, up 0.4% (3.50 points), and showed nearly a 1% gain but the rise slowed in the afternoon session. On the KOSDAQ, foreigners sold 106.6 billion KRW alone, showing strong selling pressure. Meanwhile, individuals and institutions bought 45.5 billion KRW and 69.8 billion KRW respectively.

Among the top 10 market capitalization stocks on the KOSDAQ, many are declining. Ecopro BM is down 1.07% (5,100 KRW) at 469,900 KRW. ▲L&F (-2.44%), ▲Kakao Games (-0.50%), ▲Celltrion Pharm (-0.25%), ▲Cheonbo (-0.56%), and ▲Rino Industries (-3.45%) are also down. Celltrion Healthcare (0.17%), HLB (0.51%), and Wemade (1.22%) are on the rise. Pearl Abyss is unchanged at 63,200 KRW.

By sector on the KOSDAQ, transportation is notably up 7.48%. Publishing and media replication (2.50%), metals (1.97%), and broadcasting services (1.68%) are also rising. Conversely, food and tobacco (-0.66%) and IT components (-0.59%) are slightly down.