[Asia Economy Reporter Lee Seon-ae] The relentless decline of South Korea's representative growth stocks, Naver (NAVER) and Kakao, continues. They have been hitting new lows for several consecutive trading days.
As of 9:40 AM on the 21st, Naver is trading at 215,000 KRW, down 1.38% from the previous trading day. During the session, it fell to 214,500 KRW, setting a new low.
Recently, Naver has been recording new lows daily, increasing its decline. It has fallen for four consecutive trading days since the 14th and closed flat the day before. During this period, the stock price has dropped more than 8.6%.
With concerns over tightening persisting ahead of the U.S. Federal Open Market Committee (FOMC) meeting, growth stocks are struggling, and Naver's rate of decline is particularly high. Typically, growth stocks are valued based on future cash flows, so interest rate hikes act as a negative factor for their stock prices.
At the same time, Kakao, also considered a leading domestic growth stock alongside Naver, is trading at 64,400 KRW, down 1.38%. Kakao also hit a new low during the session, dropping to 64,300 KRW. Compared to its peak in June last year, it has fallen more than 60%.
There is a prevailing expectation that the FOMC will raise the benchmark interest rate by at least 75 basis points this week. Some argue that the possibility of an ultra-step (a 1 percentage point increase) should also be considered. As tightening accelerates, concerns are widespread that growth stocks may face difficulties in future fundraising.
Yesterday, the U.S. 2-year Treasury yield surpassed 4% for the first time since October 2007. The 10-year Treasury yield rose to around 3.6%, marking the highest level since April 2011.
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