The Big Step by the Bank of Korea... For Now, the Stock Market is Relieved

KOSPI and KOSDAQ Close Higher
Concerns Over Additional Big Step Ease Despite BOK's Big Step

On the 11th, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On that day, the KOSPI index started at 2193.02, down 39.82 points (1.78%) from the previous trading day. The won-dollar exchange rate opened at 1428.0, up 15.6 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Junho Hwang] On the 12th, the stock market closed higher after digesting the Bank of Korea's big step (a 50bp increase in the base interest rate). In the early session, the market was directionless due to mixed trends in the U.S. stock market and increased volatility in the UK bond market, but after the Bank of Korea's decision, foreign inflows strengthened, maintaining the upward trend.

On that day, the KOSPI closed at 2202.47, up 10.40 points (0.47%) from the previous session. Foreign investors net bought stocks worth 236 billion KRW, which was effective. Individual investors took the opportunity to realize profits and net sold stocks worth 147.1 billion KRW. Institutions sold stocks worth 105 billion KRW.

There were 410 stocks that rose that day. Among them, most of the large-cap stocks closed higher. Notably, semiconductor stocks such as SK Hynix (4.21%) and Samsung Electronics (0.72%) showed strong gains. Following news that the U.S. government, which banned semiconductor equipment exports to China, allowed Samsung Electronics and SK Hynix's local factories in China to import equipment for one year without applying for U.S. government approval, foreign inflows expanded. On the other hand, LG Energy Solution, which had shown gains the previous day, fell 2.91%, and LG Chem (-1.01%) also declined.

By sector, textiles and apparel (1.73%), construction (1.70%), pharmaceuticals (1.37%), and steel and metals (1.31%) stood out with gains. In the textiles and apparel sector, Wonlim, Hanse Industrial, and Jeonbang recorded increases of over 4%.

The KOSDAQ also closed higher at 671.67, up 2.17 points (0.32%). Individual and institutional investors net bought stocks worth 6.8 billion KRW and 64.2 billion KRW respectively, but foreign investors showed a net selling intention of 82.6 billion KRW, resulting in a slight rise.

Among the large-cap stocks, EcoPro (3.91%), Celltrion Pharm (1.66%), and EcoPro BM (1.12%) rose. By sector, the entertainment sector (1.73%) showed notable gains. Within the entertainment sector, RaemongRaein (7.24%), JYP ENT. (6.00%), Wysiwyg Studios (4.79%), and Cube Entertainment (4.46%) showed significant increases.

On that day, the won-dollar exchange rate closed at 1425.10 won, down 0.70% from the previous day.

Park Gwangnam, a researcher at Mirae Asset Securities, analyzed, "The Korean stock market, which started lower due to financial instability from the UK and recession concerns, turned upward after digesting the Monetary Policy Committee's rate hike announcement. Although it was the second 50bp increase this year, foreign buying expanded as uncertainty was judged to have been resolved."

Ahn Jaekyun, a researcher at Shinhan Investment Corp., evaluated, "Although the base interest rate returned to the 3% range for the first time in about 10 years since September 2012, it is notable that two minority opinions advocated a 25bp increase. As opinions diversified within the Monetary Policy Committee, concerns about consecutive 50bp hikes in November have somewhat diminished."