[Asia Economy Reporter Myunghwan Lee] Inflation and fears of tightening pressured the stock market, but defensive sectors actually performed well.
According to the Korea Exchange on the 23rd, the electricity and gas industry index on the KOSPI market closed at 768.90, up 2.37% from the previous trading day, marking the largest increase among all KOSPI indices. The food and beverage sector also rose 1.69% compared to the previous day. On the KOSDAQ market, industry indices for defensive sectors such as food and tobacco (3.46%) and telecommunication services (0.66%) also increased.
Although the domestic stock market fell across the board the previous day due to the U.S. Federal Reserve's decision to implement a third consecutive giant step (a 0.75 percentage point hike in the benchmark interest rate at once), defensive sectors rose instead. On that day, the KOSPI closed at 2,332.31, down 0.63% (14.90 points) from the previous day, slipping to the 2,330 level. The KOSDAQ index also ended trading at 751.41, down 0.46% (3.48 points) from the previous day.
Looking at individual stock price movements, food and feed-related stocks on the KOSDAQ market such as Hanil Feed (29.94%), Farm Story (14.22%), and Hantop (13.70%) posted double-digit gains. On the KOSPI, food and beverage stocks including Shinsong Holdings (11.60%), Sajo Dong-A One (7.81%), Sempio (6.61%), SPC Samlip (6.61%), and Daehan Sugar (6.45%) showed upward trends.
The securities industry also advised increasing the proportion of defensive stocks for the time being, citing the possibility of expanded downside volatility in the stock market. Daejun Kim, a researcher at Korea Investment & Securities, diagnosed, "We have entered a risk-off environment with weak risk asset preference," adding, "We should respond with defensive stocks such as food and beverage, telecommunications, and utilities, which have low market sensitivity, as well as automobiles, secondary batteries, and defense sectors that are less affected by high exchange rate shocks."
Kyungmin Lee, a researcher at Daishin Securities, also said, "The downward trend in the stock market is expected to continue, so strategically, we maintain a reduced stock allocation and increased cash allocation," but advised, "From a portfolio investment perspective, we recommend increasing the proportion of dividend stocks (telecommunications, non-life insurance, etc.) and defensive stocks (telecommunications, food and beverage, etc.)."
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