European Currency Pressure... KOSDAQ Falls Below 700 Mark

Strong Dollar Continues Amid Europe-Originated Negative Factors
Won Weakness Persists, Leading to Stock Market Decline
KOSDAQ Falls Below 700 Points

On the 26th, when the won-dollar exchange rate surpassed 1,420 won for the first time in about 13 years and 6 months, dealers were working in the dealing room of KB Kookmin Bank in Yeouido, Seoul. On the same day, the KOSPI index opened at 2,260.80, down 29.20 points (1.28%) from the previous trading day, continuing its downward trend. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Hwang Junho] On the 26th, the stock market is recording a sharp decline due to the strong dollar influenced by the weak euro.

As of 1:35 PM, the KOSPI stands at 2226.31, down 2.78% from the previous session. Although institutions have net bought stocks worth 103.2 billion KRW, individual and foreign investors have net sold 10.1 billion KRW and 57.7 billion KRW respectively, causing the index to take a steep downward path.

Among all stocks, only 25 are showing gains. The top market capitalization stocks are all declining. Samsung Electronics, the unchanging market leader, has widened its losses to 1.28% compared to this morning. SK Hynix also leads the semiconductor sector’s overall decline with a 1.44% drop. The secondary battery sector leaders such as LG Energy Solution (2.61%), Samsung SDI (1.97%), and LG Chem (4.30%) are showing significant declines.

By sector, insurance and electricity & gas, which showed gains in the morning, have turned to declines in the afternoon. However, the telecommunications sector showed gains, supported by SK Telecom (0.76%) and KT (0.28%).

The construction sector is down 5.39%, reflecting concerns about an economic recession across the industry. The paper & wood and machinery sectors are also recording declines in the 5% range.

The KOSDAQ fell below the 700 mark for the first time since June 2020. As of this time, it is at 697.84, down 4.32% from the previous session. Foreign and institutional investors show net buying intentions of 9.7 billion KRW and 45.3 billion KRW respectively. However, individual investors have net sold 45.7 billion KRW, causing the KOSDAQ index to slip.

Among all stocks, only 83 are rising. Celltrion Healthcare, the largest by market cap on KOSDAQ, maintained a slight gain in the morning but turned to a decline in the afternoon. As of now, it is down 0.16% at 64,000 KRW. EcoPro BM and L&F showed declines in the 5% range in the morning and widened losses to the 6% range in the afternoon. Additionally, EcoPro and HLB are also down more than 3%.

Seo Sang-young, Head of Media Content at Mirae Asset Securities, cited the "strong dollar" as the cause of today’s market decline. He said, "Today’s market reflects last Friday’s global market movements," and added, "The strong dollar caused by the further sharp drop of the British pound has expanded the won’s weakness, with the USD/KRW exchange rate surpassing 1,430 won."

As of this time, the won-dollar exchange rate is at 1,431.70 won, up 1.59% from the previous session.

In Italy, uncertainty over the emergence of a prime minister from a fascist party is fueling the euro’s weakness. In the UK, concerns about an economic recession have grown as plans to raise corporate tax were withdrawn and income tax cuts were proposed, leading to the pound’s weakness. Accordingly, the pound, which weakened by 3.5% against the dollar last Friday, is currently showing an additional decline of over 3% today.

Seo said, "This afternoon, attention will continue on the yen’s weakness in Japan," and predicted, "Market volatility could further increase."