KOSPI 2291.49... New Year Low
Foreign Selling Expands in Afternoon
Institutions Switch from Buying to Selling
June Trade Deficit... Won-Dollar Rises to 1290 Range
[Asia Economy Reporter Hwang Yoon-joo] On the first trading day of the second half of 2022, the KOSPI hit a new yearly low again. Although it started the day with gains, it turned downward in the morning and fell below the 2300 mark in the afternoon.
As of 2:23 PM on the 1st, the KOSPI stood at 2291.49, down 1.76% (41.15 points) from the previous day. This index represents a yearly low, breaking the previous low of 2342.81 recorded on June 22 after 7 trading days.
The KOSPI opened at 2342.92, up 0.44% (10.28 points), but turned downward in the morning and widened its losses.
Foreign selling pressure increased, intensifying downward pressure. Foreigners and institutions are net sellers of 284.1 billion KRW and 14.3 billion KRW respectively, while individuals are net buyers of 287.7 billion KRW.
The June export data released in the morning appears to have influenced the market. Last month, the trade balance recorded a deficit of 2.47 billion USD. This marked three consecutive months of deficits for the first time in 14 years since the 2008 financial crisis. The background for last month's trade deficit was a sharp rise in global energy prices, which significantly increased import costs.
Jae-eun Kim, a researcher at NH Investment & Securities, analyzed, "The KOSPI's third-quarter operating profit forecasts are being revised downward compared to the beginning of the year. The effect of exchange rates alone is limited, and in the mid-to-long term, rising costs and expenses burden corporate profits." This means that as cost expenses increase, corporate profitability relatively decreases, which also affects the potential for stock price gains.
Among the top 10 companies by market capitalization, only Kia (+0.91%) is rising. Samsung Electronics (-1.75%), which hit a new low, saw its losses widen. LG Energy Solution (-4.04%), SK Hynix (-4.18%), Kakao (-4.29%), and Samsung SDI (-3.76%) also showed notable declines.
Sector declines also deepened. The textile and apparel sector (-4.49%), medical precision (-2.54%), electrical and electronics (-2.47%), and service industries (-1.96%) are falling in that order.
Kyung-min Lee, a researcher at Daishin Securities, explained, "The market is down 1.5% due to foreign net selling. The decline in U.S. Treasury yields and the intraday reversal to a stronger dollar reflected amplified concerns about a U.S. economic recession."
He added, "The news of Korea’s expanded June trade deficit also fueled won weakness, pushing it back up to the mid-1290 KRW range. Foreigners expanded their net selling of spot stocks during the day, and institutions, which maintained net buying until the morning, switched to net selling in the afternoon, increasing supply-demand instability and adding downward pressure on the stock market."
As of 2:52 PM, the KOSDAQ stood at 726.71, down 2.51% (18.73 points) from the previous day. The KOSDAQ opened at 748.20, up 0.37% (2.76 points), but turned downward during the morning.
Foreigners and institutions are net sellers of 132.1 billion KRW and 59.0 billion KRW respectively, pushing the index down. Individuals alone are net buyers of 230.6 billion KRW.
Among the top 10 companies by market capitalization, only CJ ENM is unchanged, while the others are declining. L&F (-6.19%) and Alteogen (-5.56%) are experiencing the steepest drops. Ecopro BM (-4.41%) and Pearl Abyss (-4.21%) are also plunging sharply.
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