Over 500 Stocks Hit New Lows Amid Powell Shock... "KOSPI Could Fall to the 2200 Level"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The domestic stock market is collapsing helplessly as the U.S. Federal Reserve (Fed) confirms once again its high-intensity monetary tightening stance by implementing a third consecutive giant step (each step being a 0.75 percentage point increase in the base interest rate). In particular, among growth stocks that are more vulnerable during interest rate hikes, many are hitting new 52-week lows.

According to the Korea Exchange on the 25th, on the last trading day of last week, the 23rd, game stocks including NCSoft all recorded new 52-week lows during the session. On that day, NCSoft closed at 330,000 won, down 4.9% from the previous trading day. Early in the session, NCSoft fell to 325,000 won, breaking its 52-week low. Kakao Games, Netmarble, and Krafton showed similar trends. Kakao Games widened its losses to 42,900 won shortly after the market opened, breaking the 52-week low recorded the previous day in just one day. Netmarble and Krafton also dropped to 544,000 won and 205,000 won respectively, consecutively breaking their 52-week lows.

The day before, NAVER hit a new 52-week low. On the 22nd, NAVER fell to 204,000 won during the session, breaking its 52-week low. On the same day, Kakao dropped 4.53% to 61,100 won, recording a new low. The next day, it fell further to 60,900 won, hitting another new low.

Since the Fed's rate hike announcement on the 22nd, more than 500 stocks in the Korean market have hit new 52-week lows. Not only growth stocks but also large-cap stocks like SK Hynix have not been spared. SK Hynix fell to 83,300 won during the session on the 23rd, breaking its 52-week low.

In the securities industry, the dominant view is that the domestic stock market's downward trend is inevitable for the time being. There are also opinions that the KOSPI index could fall below the previous low of 2,276.63 recorded on July 4th, as it breaks below the 2,300 level next week.

Lee Kyung-min, head of the investment strategy team at Daishin Securities, analyzed, "The KOSPI index's downward trend will solidify as it suffers from the Fed's high-intensity tightening and expanding global economic uncertainties."

There are also considerable opinions opening the possibility of the KOSPI index dropping to the 2,200 level. Yoo Seung-chang, head of the KB Securities Research Center, said, "I think the KOSPI could fall to 2,200 in the second half of the year," adding, "For the time being, concerns that the Fed's tightening stance could shrink the economy will dominate the market, making a weak trend likely." Jung Myung-ji, head of the investment information team at Samsung Securities, also said, "Given the third-quarter earnings shock and significantly worsened liquidity, it is highly likely that the KOSPI index will fail to hold the 2,300 level."