KOSPI Down 30.7% from Last July's Peak
KOSDAQ Down 31.2% from Last August's Peak
[Asia Economy Reporter Hwang Yoon-joo] The market capitalization of the KOSPI and KOSDAQ markets has evaporated by 620 trillion won in just over a year due to the U.S.'s aggressive tightening moves.
According to the Korea Exchange on the 25th, the KOSPI index closed at 2290.00 on the 23rd. Based on the closing price, the KOSPI has fallen 30.7% (1015.21 points) from its all-time high of 3305.21 recorded on July 6 last year.
The market capitalization decreased from 2314.4174 trillion won to the current 1804.5 trillion won, a drop of 509.9174 trillion won.
During the same period, the KOSDAQ index fell from 1060.00 on August 9 last year to 729.36 on the 23rd. This is a 31.2% (330.64 points) decline from its peak. Market capitalization also shrank from 443.086 trillion won to 332.9038 trillion won, a decrease of 110.1822 trillion won.
As a result, the combined market capitalization of the KOSPI and KOSDAQ indices has decreased by 620.0996 trillion won compared to their peak levels.
Samsung Electronics, ranked first in market capitalization, saw its stock price fall 32.9% from 81,200 won on July 6 last year to 54,500 won, wiping out 159.3932 trillion won in market capitalization. SK Hynix's stock price also adjusted 33.2% from 125,000 won to 83,500 won, reducing its market capitalization by 30 trillion won.
With interest rate hikes freezing growth stock investment sentiment, the market capitalization of Kakao and Naver (NAVER) has disappeared by more than 77 trillion won.
Kakao's stock price dropped 61.3% from 157,500 won to 61,000 won, causing its market capitalization to shrink from 69.9189 trillion won to 27.164 trillion won, a loss of 42.7549 trillion won.
Naver also saw its stock price adjust by 48.6%, resulting in a market capitalization evaporation of 32.7336 trillion won. The market capitalization rankings of Kakao and Naver also fell from 3rd and 4th at the KOSPI peak to 10th and 8th currently, respectively.
The reason for the stock price volatility is that tightening by major central banks, including the U.S., is accelerating the outflow of investment funds from global markets. Foreign investors have net sold 16.7547 trillion won worth of stocks in both the KOSPI (12.3216 trillion won) and KOSDAQ (4.4331 trillion won) markets this year.
The U.S. central bank, the Federal Reserve (Fed), has raised the benchmark interest rate by 0.75 percentage points three consecutive times through this month.
As a result, the U.S. policy rate (benchmark rate) rose to 3.00?3.25% annually, the highest level in 14 years and 8 months since January 2008, and it is 0.75 percentage points (upper bound) higher than the Bank of Korea's benchmark rate (2.50% annually), raising concerns about capital outflows.
Considering the Fed's dot plot median forecast of the benchmark rate rising to 4.4% by the end of this year and 4.6% by the end of next year, the Fed is expected to raise rates by an additional 1.25 percentage points by the end of this year. There is a possibility of a 0.75 percentage point hike in November and a 0.50 percentage point hike in December.
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