Dollar Dips... KOSPI Starts Higher

KOSPI and KOSDAQ Start Higher
Analyzed as Impact of Decline in USD-KRW Exchange Rate

On the 7th, when the won-dollar exchange rate surpassed 1,380 won for the first time in 13 years and 5 months, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] On the 8th, ahead of the Chuseok holiday, the KOSPI opened higher as the dollar's strength eased.

On this day, the KOSPI started the session at 2,393.27, up 16.81 points (0.71%) from the previous day. Fifteen minutes later, it was recorded at 2,388.69, up 0.51%. In the early session, individuals and institutions were net buyers, purchasing 108.1 billion KRW and 65.5 billion KRW respectively, supporting the market. Conversely, foreigners showed a net selling intention of 175.1 billion KRW.

The market rise is analyzed as a result of the decline in the exchange rate. The won-dollar exchange rate opened at 1,377.70 won, down 0.47% from the previous session. The exchange rate decline is attributed to the drop in U.S. Treasury yields the day before. Lael Brainard, Vice Chair of the Federal Reserve (Fed), which sets the direction of U.S. monetary policy, said, "At some point in the tightening cycle, risks will be two-sided," adding, "Uncertainty about the pace of tightening and the impact of the tightening cycle on the rest of the world pose risks associated with excessive tightening."

As the Fed, which has embarked on high-intensity tightening to tame inflation, is also seen to be concerned about a recession, the two-year Treasury yield fell to 3.433% during the session. As yields fell, relief spread that the dollar, which had been rising continuously, could come down, and U.S. stock markets rose across the board. The Dow rose 1.40%, the S&P 1.83%, and the Nasdaq 2.14%.

At this time, among all KOSPI-listed stocks, 664 stocks rose while 173 stocks fell. Among the top market capitalization stocks, LG Chem showed a strong gain of 2.73% compared to the previous session. Samsung SDI (1.81%) and Samsung Biologics (1.23%) also showed upward trends.

By sector, pharmaceuticals (1.81%), textiles and apparel (1.33%), and transportation and warehousing (1.11%) showed gains. In pharmaceuticals, stocks such as Celltrion (3.63%), SK Bioscience (2.32%), and Hyundai Pharm (2.43%) stood out.

The KOSDAQ opened at 776.59, up 8.40 points (1.09%). Individuals and institutions led the index's rise with net purchases of 11.3 billion KRW and 17.2 billion KRW respectively. Among all stocks, 1,175 rose while 235 fell.

All of the top 10 market capitalization stocks showed gains. Notably, HLB (6.45%), Alteogen (3.29%), and Celltrion Healthcare (2.32%) stood out.

By sector, transportation parts (3.04%), food and tobacco (2.62%), and electrical and electronics (2.41%) were strong. In the transportation parts sector, Samki, Medicox, and NVH Korea showed significant gains.

Han Ji-young, a researcher at Kiwoom Securities, said, "The domestic market is expected to rebound today, supported by the U.S. market rebound amid previous oversold perceptions and the easing of the won/dollar exchange rate surge that had reached the offshore 1,390 won level (currently at the offshore 1,374 won level)."

However, she added, "Since today is the simultaneous expiration day for futures and options, changes in supply and demand in the cash and futures markets, mainly by foreigners and institutions, may increase."