KOSPI and KOSDAQ Turn Downward... Impacted by Three Consecutive Months of Trade Deficit

KOSPI and KOSDAQ Start Higher
June Trade Deficit Announced
Both Indices Turn Lower in Morning
Foreigners Increase Selling on KOSPI
Samsung Electronics Hits New Low
Semiconductors and Secondary Batteries Continue Weakness

[Asia Economy Reporter Hwang Yoon-joo] On the first trading day of the second half of the year, the Korean stock market started higher but lost momentum early in the session and turned lower.

As of 10:39 a.m. on the 1st, the KOSPI was trading at 2,313.86, down 0.80% (18.78 points) from the previous day. The KOSPI opened at 2,342.92, up 0.44% (10.28 points), but declined within an hour.

Foreign demand weighed on the index. Foreigners are currently net sellers of 173.3 billion KRW. However, foreigners are buying 215.7 billion KRW in the futures market. Institutions and individuals are net buyers of 103.4 billion KRW and 69.7 billion KRW, respectively.

The June export figures are interpreted as increasing downward pressure on the index. Last month, the trade balance recorded a deficit of 2.47 billion USD. It marked a deficit for three consecutive months for the first time in 14 years since the 2008 financial crisis. The trade balance recording a deficit for three consecutive months is the first occurrence since June to September 2008, when the global financial crisis hit.

The background for last month's trade deficit is the sharp rise in global energy prices, which significantly increased import costs. When cost expenses rise, the global competitiveness and profitability of Korean companies may relatively decline. This means that the potential for stock price gains may fall short of expectations. If this situation continues, investment attractiveness is bound to decrease.

Looking at the top 10 stocks by market capitalization, the decline rate is more pronounced than on the KOSDAQ. Only Hyundai Motor (+0.55%) and Kia (+1.42%) are rising. LG Chem is unchanged.

The rest are all falling. Semiconductor and secondary battery stocks are weak again today. Samsung Electronics (-0.88%) recorded a new intraday low at 56,800 KRW, and SK Hynix (-2.42%) also showed a notable decline. LG Energy Solution (-3.10%) and Samsung SDI (-2.26%) are also noticeably down.

Samsung Electronics achieved record-high performance with annual sales exceeding 279 trillion won. On the 7th, Samsung Electronics announced that its preliminary consolidated results for last year showed sales of 279.04 trillion won and an operating profit of 51.57 trillion won. Employees are arriving at Samsung Electronics Seocho Office on the day. Photo by Mun Honam munonam@

By sector, Textile & Apparel (-2.54%), Electrical & Electronics (-1.39%), and Services (-1.03%) show high decline rates. On the other hand, Construction (+2.58%), Telecommunications (+2.08%), Food & Beverage (+1.58%), Insurance (+1.27%), and Securities (+1.04%) are rising.

As of 11:09 a.m., the KOSDAQ is at 740.29, down 0.69% (5.12 points) from the previous day. The KOSDAQ opened at 748.20, up 0.37% (2.76 points) today.

Foreigners and institutions are net sellers of 76.4 billion KRW and 29.3 billion KRW, respectively. Individuals are net buyers of 141.9 billion KRW.

Among the top 10 stocks by market capitalization, L&F (-3.90%) has the largest decline rate. This is followed by EcoPro BM (-3.44%), Alteogen (-3.44%), Pearl Abyss (-1.37%), and HLB (-0.85%). Celltrion Healthcare (+0.15%), Kakao Games (+0.31%), Studio Dragon (+1.42%), and Chunbo (+0.05%) are rising. Celltrion Pharm is unchanged.

By sector, Food & Tobacco (-2.86%), General Electrical & Electronics (-1.86%), Other Services (-1.25%), and IT Components (-1.11%) showed the highest decline rates.