Rising Oil Prices Raise US Recession Concerns... KOSPI Extends Losses Over 1% in Afternoon Session

KOSPI Drops to Support Level 2650
"Unstable Trend Due to Weak US Market"

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] The KOSPI index fell back to the 2650 level on the 2nd. After rising for three consecutive trading days since the end of last month, the domestic stock market was significantly dampened by concerns over a recession resurfacing in the U.S. stock market and the rebound of international oil prices.

As of 1:41 PM on the day, the KOSPI index was trading at 2655.80, up 30.10 points (1.12%) from the previous day. The index opened down 15.16 points and has been widening its losses, threatening the 2650 level. While individual investors are defending the index with net purchases worth 672.3 billion KRW, institutions are net selling about 642.6 billion KRW. Foreigners' net selling also expanded to 65.3 billion KRW.

Lee Kyung-min, head of the investment strategy team at Daishin Securities, said, "Due to the sluggish U.S. stock market, the domestic market is showing an unstable trend. It appears that the KOSPI index is experiencing a retracement after a relief rally at the 2650 support level, but if the 2650 level breaks, it could fall to 2630."

The previous day, the U.S. stock market was dragged down by the Federal Reserve's Beige Book report mentioning weak demand, the burden of rising interest rates due to quantitative tightening, and JPMorgan CEO Jamie Dimon's warning to "prepare for the hurricane (storm) coming to the economy." On the same day, WTI (West Texas Intermediate) crude oil closed at $115.26 per barrel, up 0.51% from the previous day. Consequently, Japan's Nikkei 225 and Hong Kong's Hang Seng indices also declined.

In the KOSPI market, 675 stocks fell, far outnumbering the 401 rising stocks. Most sectors are weak except for textiles and apparel (0.56%) and non-metallic minerals (1.11%), with the construction sector falling more than 2%.

NAVER, which showed weakness early in the session, turned slightly positive (0.17%), while Samsung Electronics, Hyundai Motor, LG Chem, Samsung SDI, Kakao, and Kia are all down more than 1%.

At the same time, the KOSDAQ index fell 3.96 points (0.44%) to 889.40. Foreigners (-87.9 billion KRW) and institutions (-48.1 billion KRW) are both net sellers, while individuals are net buying about 140.6 billion KRW, preventing further declines.

Among the top market cap stocks on KOSDAQ, only L&F is slightly up (0.31%), while the rest are weak. Cheonbo, which showed a slight rise early in the session, is flat (0%), and Wemade's self-issued cryptocurrency WEMIX is falling more than 5% amid controversy over its classification as a security.

Kim Ha-jung, a researcher at Daol Investment & Securities, pointed out in a report that day, "WEMIX has been reported to the Financial Services Commission for not complying with capital market law regulations despite being classified as a security. The issue is whether tokens from P2E (play-to-earn) platforms like WEMIX are securities, with the Musicow case cited as a similar precedent."

Meanwhile, in the KOSDAQ market, Notus is recording its second consecutive day limit-up due to the effect of an 800% free stock dividend ex-rights, and Woorim PTS surged to the price limit amid speculation that it could be a target for Samsung Electronics' mergers and acquisitions (M&A).

Woorim PTS is strong on news that the M&A-related organizations are reorganizing and that large-scale M&A is likely to become visible soon. Recently, Woorim PTS has embarked on domestic development of precision robot reducers as a government national project and is developing and supplying reducers with Samsung Heavy Industries and others.