Worsening Investor Sentiment Amid 'Inflation Fear'... KOSPI Starts Down Over 2%

On the 14th, when the US stock market plummeted due to inflation fears, the won-dollar exchange rate and the KOSPI were displayed in the dealing room of Hana Bank in Euljiro, Seoul. On that day, the exchange rate surpassed 1,390 won for the first time in 13 years and 5 months. Photo by Moon Honam munonam@

[Asia Economy Reporter Kwon Jaehee] Following the shock from the U.S. August Consumer Price Index (CPI) released the previous day, the domestic stock market opened on the 14th with a decline of over 2%. This came after the U.S. stock market closed sharply lower, with the Nasdaq plunging over 5% and all three major indices ending with significant losses. As inflation remains stubbornly high, the possibility of an 'ultra step' (a 100 basis point hike at once) at the upcoming September FOMC meeting has been raised, negatively impacting investor sentiment.

As of 9:25 a.m. on the day, the KOSPI index was trading at 2,386.47, down 2.57% (63.07 points) from the previous trading day. The KOSPI opened the session at 2,390.47, down 2.41% (59.07 points).

By investor type, individual investors were net buyers with 172 billion KRW, while foreigners and institutions sold stocks worth 53.3 billion KRW and 120.3 billion KRW, respectively.

Seo Sang-young, Head of Media Content at Mirae Asset Securities, analyzed, "The possibility of the Fed raising interest rates by 100 basis points at the September FOMC is emerging, which is expected to act as a factor dampening investor sentiment."

All of the top 10 KOSPI stocks by market capitalization were down. Samsung Electronics (-2.93%), LG Energy Solution (-0.80%), SK Hynix (-3.27%), Samsung Biologics (-3.21%), LG Chem (-2.41%), Samsung Electronics Preferred (-2.61%), Hyundai Motor (-2.00%), Samsung SDI (-1.33%), NAVER (-4.61%), and Kia (1.23%).

At the same time, the KOSDAQ index was at 776.45, down 2.55% (20.34 points) from the previous trading day. The index opened at 775.93, down 2.62% (20.86 points).

By investor type, individuals and foreigners were net buyers of 38.7 billion KRW and 4.4 billion KRW, respectively, while institutions were net sellers of 36.4 billion KRW.

Among the top market cap stocks on the KOSDAQ, only EcoPro (1.75%) recorded gains, while all other stocks declined. These include Celltrion Healthcare (-4.02%), EcoPro BM (-2.49%), L&F (-0.64%), HLB (-4.54%), Kakao Games (-3.96%), Pearl Abyss (-3.14%), Celltrion Pharm (-4.55%), Alteogen (-4.17%), and Chunbo (-2.64%).

Han Ji-young, a researcher at Kiwoom Securities, stated, "There is even a possibility of an 'ultra step' (a 100 basis point hike at once) stronger than the giant step at the September FOMC. As we enter the blackout period before next week's FOMC, during which no comments can be made, it is impossible to receive the Fed's assessment of this CPI result. Therefore, aggressive forecasts such as a 100 basis point hike are expected to cause uncertainty in the market until the FOMC."