KOSPI Slows Its Rise Amid Narrowing Exchange Rate Decline... Fluctuates Around 2480 Level

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] The KOSPI is partially giving up some of its gains on the afternoon of the 1st. This appears to be due to the won-dollar exchange rate narrowing its decline again, putting pressure on foreign investor demand.

As of 1:45 PM on the day, the KOSPI is at 2480.89, up 0.34% (8.36 points) from the previous trading day. After opening at 2501.43, up 1.17% (28.90 points) from the previous day, the KOSPI has reduced its upward momentum and is fluctuating around the 2480 level.

The buying momentum of foreign investors, who had been making large-scale purchases in the morning session, has weakened, limiting the index's gains. Foreigners, who had net bought over 100 billion KRW in the morning session, are currently purchasing stocks worth 45.6 billion KRW. Meanwhile, institutions continue their 'buying stance' with net purchases of 151.6 billion KRW. Individuals are selling stocks worth 210.6 billion KRW.

Regarding this, Kyungmin Lee, a researcher at Daishin Securities, diagnosed, "During the session, as U.S. after-hours futures reversed to weakness and the won-dollar exchange rate, which started the day falling to the 1290 won level, narrowed its decline again to the 1300 won level, foreign demand inflows are being limited." As of 2 PM, the won-dollar exchange rate in the Seoul foreign exchange market stands at 1303.50 won, down 15.5 won from the previous day.

Top market capitalization stocks also reduced their gains somewhat. Samsung Electronics is trading at 62,600 won, up 0.64% (400 won) from the previous day, and SK Hynix is up 0.12% (100 won) at 85,100 won. Samsung Electronics Preferred shares are also rising by 1.61%, while the representative growth stock NAVER is trading at 190,500 won, up 1.87% (3,500 won) from the previous day. On the other hand, LG Chem is down 1.49% (11,000 won) at 729,000 won, along with Samsung Biologics (-0.90%) and LG Energy Solution (-0.51%) showing declines.

At the same time, the KOSDAQ index is up 1.56% (11.38 points) at 740.92. The KOSDAQ opened at 740.97, up 1.57% (11.43 points) from the previous day, and has maintained its gains.

In the KOSDAQ market, institutions are increasing their buying. Institutions are net buying 204.6 billion KRW, while foreign investors are purchasing 124.5 billion KRW. Individuals are selling stocks worth 314.2 billion KRW alone.

All top market capitalization stocks in KOSDAQ are on the rise. Pearl Abyss is trading at 45,100 won, up 3.68% (1,600 won) from the previous day, along with Rino Industrial (3.21%), Chunbo (2.70%), HLB (2.61%), and L&F (2.45%) all rising more than 2%.

The KOSPI surpassed the 2500 mark shortly after opening, influenced by the rise in major U.S. New York stock indices the previous day. This is the first time in about three months since August 19 that the KOSPI has crossed the 2500 level during trading hours.

The early session's upward momentum appears to be due to the U.S. signaling a possible slowdown in the pace of interest rate hikes. Federal Reserve Chair Jerome Powell said in a speech at the Brookings Institution the previous day, "The time to slow the pace of rate hikes could come as early as December," indicating that the Federal Open Market Committee (FOMC) regular meeting next month might decide on a 'big step' (0.50 percentage point increase) rather than a 'giant step' (0.75 percentage point increase) in the benchmark interest rate.

Researcher Kyungmin Lee diagnosed, "Chairman Powell's remarks simultaneously brought in expectations that the economy might be better than anticipated, relief regarding monetary policy, and hopes for easing COVID-19 related restrictions in China, all of which positively influenced investor sentiment."