KOSPI Breaks Psychological Resistance Level of 2500... Lowest in 1 Year and 7 Months

Breaking the Record for Consecutive Points Once Again

On the 14th, KOSPI fell more than 1% in the early session, breaking below the 2500 level. Dealers are working in the Hana Bank dealing room in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Kwon Jae-hee] The KOSPI continued to decline on the 14th following the previous day, closing below the "psychological resistance level" of 2500. It hit a new yearly low once again due to the impact of inflation shocks in the U.S.

On this day, the KOSPI index closed at 2492.97, down 0.46% (11.54 points) from the previous trading day. This marked another new yearly low based on the closing price, following the previous day. The last time the KOSPI closed below 2500 was on November 13, 2020 (2493.87), about 1 year and 7 months ago.

The KOSPI opened at 2472.96, down 1.26% (31.55 points) from the previous close, influenced by the sharp drop in the U.S. stock market, and during the session it fell as low as 2457.39 before narrowing the losses.

Later, a rebound buying wave emerged, briefly recovering above the 2500 mark during the session, but it failed to sustain the upward momentum and ultimately closed in the 2490 range.

By investor type, foreigners sold a net 278.5 billion KRW, pulling the index down. In contrast, institutions and individuals bought net 194.7 billion KRW and 40.5 billion KRW respectively, helping to defend against further declines.

Market expectations are growing that the June Federal Open Market Committee (FOMC) meeting on the 14th-15th may see a "giant step" (0.75% rate hike) rather than just a "big step" (0.5% rate hike).

According to the CME Group's FedWatch on the 3rd (local time), the probability of the Federal Reserve raising the benchmark interest rate by 0.75 percentage points at this meeting surged to 93.0%, up fourfold from 23.2% the day before.

Investment banks such as Barclays, Jefferies, Goldman Sachs, Nomura Holdings, and JP Morgan are also weighing in on the possibility of a giant step.

The U.S. Consumer Price Index (CPI) for May, released on the 10th, rose 8.6% year-on-year, marking the highest increase in 41 years since December 1981.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The KOSPI and KOSDAQ both fell due to the sharp drop in the U.S. stock market the previous day amid growing concerns over aggressive rate hikes by the Federal Reserve due to high inflation." He added, "The inversion of the 10-year and 2-year U.S. Treasury yields also heightened recession fears."

Among the top market cap stocks, LG Energy Solution's (2.77%) rise stood out after announcing the expansion of its cylindrical battery production line to supply Tesla, while most other stocks showed weakness.

Samsung Electronics, the market leader, closed at 61,900 KRW, down 0.32%, marking a new 52-week low for the third consecutive trading day. NAVER (-0.39%) and Kakao (-0.13%) also recorded new 52-week lows during the session following the previous day.

By sector, all sectors except for Electric & Electronics (0.03%) and Transportation & Warehousing (0.58%) were weak. Paper & Wood (-2.26%), Steel & Metals (-1.73%), Machinery (-1.48%), and Medical Precision (-2.26%) all declined.

The KOSDAQ market nearly broke below the 800 mark but successfully defended the 800 level.

The KOSDAQ index closed at 823.58, down 0.63% (5.19 points) from the previous trading day. This was the lowest closing level since October 19, 2020 (822.25).

The index opened at 816.25, down 1.51% (12.51 points) from the previous close, and during the session fell as low as 804.38 before narrowing losses.

By investor type, individuals sold a net 97.7 billion KRW, while institutions and foreigners bought net 87.9 billion KRW and 3.6 billion KRW respectively.

Among the top market cap stocks, secondary battery stocks such as Ecopro BM (4.77%), L&F (3.42%), and Cheonbo (0.28%) rose significantly, buoyed by LG Energy Solution's strength. Conversely, Pearl Abyss (-0.68%), CJ ENM (-1.47%), and Wemade (-14.29%) declined.