[Market Close] US PCE Caution, Foreigners and Institutions 'Sell'... KOSPI Falls to 2330 Level

Won-Dollar Exchange Rate Surpasses 1300 Won at Opening
Foreign Demand Unfavorable...Afternoon Institutional Selling Expands
US PCE Caution Rises...US Futures Decline
Secondary Battery, Semiconductor Sectors Weakness

The KOSPI opened at 2,481.66, up 34.28 points (1.40%) from the previous trading day, as employees work in the dealing room of Hana Bank in Jung-gu, Seoul on the 16th. The KOSDAQ index rose 13.54 points (1.69%) to 812.95, and the won-dollar exchange rate started at 1,278.0 won, down 12.5 won. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Hwang Yoon-joo] On the 30th, the KOSPI index fell to the 2330 level and closed lower. Negative U.S. Q1 GDP (Gross Domestic Product) figures, remarks by Federal Reserve (Fed) Chair Jerome Powell, and the won-dollar exchange rate surpassing the 1300 level dampened investor sentiment from the start of trading. In the afternoon, concerns over the upcoming PCE (Personal Consumption Expenditures) report scheduled for the 30th (local time) and the decline in U.S. stock index futures dragged both major indexes down.

On the day, the KOSPI closed at 2332.64, down 1.91% (45.35 points). The KOSPI opened at 2368.57, down 0.40% (9.42 points), then widened its losses and collapsed.

◆ U.S. Q1 GDP, Powell's Remarks, Exchange Rate... KOSPI Investor Sentiment Weakens = Foreign and institutional investors led a dual selling spree throughout the session. Foreigners and institutions sold a net 234 billion KRW and 320.6 billion KRW, respectively. Individual investors bought a net 521.1 billion KRW. Foreigners led the selling in the early session, but institutional selling overwhelmed foreign selling in the latter part of the day. Foreigners maintained a 'sell' stance in the futures market but bought 2.3 billion KRW just before the close.

Externally, the U.S. Q1 GDP growth rate was confirmed at an annualized negative (-) 1.6%. This is the first time quarterly growth has turned negative since Q2 2020. If GDP growth is negative for two consecutive quarters, it is considered a 'recession.'

Along with this, Powell's remarks also heightened concerns. On the 29th (local time), at the European Central Bank (ECB) annual policy forum, Powell stated, "The Fed is focused on bringing down inflation," signaling a commitment to tightening.

Domestically, the won-dollar exchange rate was an issue. The won-dollar rate started at 1300.5 won, up 1.5 won, and hit a new high. When the won weakens, even if the stock market yields investment returns, the risk of foreign exchange losses increases, intensifying foreign investors' capital outflow sentiment.

[Image source=Yonhap News]

Among the top 10 market capitalization stocks, declines in secondary batteries and semiconductors were prominent. Samsung SDI (-6.67%) and LG Energy Solution (-5.24%) had the highest drop rates. Samsung Electronics (-1.72%) closed at 57,000 won, and SK Hynix (-3.19%) ended the day at 91,000 won.

By sector, textiles and apparel (-5.18%), non-metallic minerals (-3.82%), chemicals (-3.35%), and electrical and electronics (-2.88%) showed notable declines.

Seo Sang-young, head of Mirae Asset Securities, analyzed, "The KOSPI fell due to concerns over the semiconductor and secondary battery industries and expanded foreign selling amid a strong dollar."

◆ KOSDAQ closes down over 2%... Weakness in Secondary Battery-Related Stocks = The KOSDAQ closed at 745.44, down 2.22% (16.91 points) from the previous day. The KOSDAQ opened at 762.45, up 0.01% (0.10 points), but turned lower shortly after the open, widening losses and sharply falling in the latter part of the session.

Foreign and institutional investors sold a net 163 billion KRW and 83.8 billion KRW, respectively, dragging the index down. Individual investors alone bought a net 269.9 billion KRW.

Among the top 10 market capitalization stocks, L&F (-7.49%) and EcoPro BM (-6.51%) had the highest declines. The weakness in secondary batteries was also reflected in the KOSDAQ market.

By sector, general electrical and electronics (-4.97%), paper/wood (-4.54%), IT components (-4.42%), and chemicals (-4.04%) showed high declines. Overall, the top declines in KOSDAQ were larger than those in KOSPI.