KOSPI Retreats to 2430 Amid Caution... Concerns Over US Employment Data

Foreigners and Institutions Focused Selling in Semiconductor Sector
Samsung Electronics and SK Hynix Fall Over 3%
Heightened Caution Ahead of US Employment Data

[Asia Economy Reporter Park Hyungsoo] The KOSPI index fell nearly 2% as the market capitalization leaders in the domestic securities market all declined. This appears to reflect growing caution ahead of the U.S. employment report announcement.

On the 2nd, the KOSPI closed at 2,434.33, down 1.84% (45.51 points) from the previous trading day. The index opened at 2,471.50, down 0.34% from the previous day, and widened its losses in the afternoon. The recent upward trend increased profit-taking desires.

Foreign investors and institutions recorded net sales of 405.9 billion KRW and 508.7 billion KRW, respectively. Individual investors showed a net buying preference of 908.6 billion KRW.

Lee Kyungmin, a researcher at Daishin Securities, said, "The U.S. ISM manufacturing index has entered a contraction phase, raising concerns about economic deterioration," adding, "Foreign investors increased net sales centered on semiconductors, intensifying downward pressure on the KOSPI."

Samsung Electronics and SK Hynix shares fell more than 3%. Foreign investors sold 150 billion KRW and 138 billion KRW worth of Samsung Electronics and SK Hynix shares, respectively. Institutions also led the price decline with net sales of 125 billion KRW and 66.6 billion KRW, respectively. Not only semiconductor-related stocks but also 19 out of the top 20 market capitalization stocks, except LG Electronics, declined. LG Energy Solution (-0.17%), Samsung Biologics (-1.58%), LG Chem (-1.52%), Samsung SDI (-1.10%), Hyundai Motor (-1.46%), NAVER (-1.07%), Kia (-3.06%) all fell together. Chinese consumer-related stocks such as LG Household & Health Care and Amorepacific rose on news of eased COVID-19 restrictions in major Chinese cities.

By sector, construction (-3.35%), insurance (-2.72%), electric and gas utilities (-2.55%), and electrical and electronics (-2.39%) saw significant declines. Sell orders poured in mainly from sectors that had recently shown strength.

Dark clouds have gathered over the U.S. economic outlook, which greatly influences global stock markets. Signs of a faster-than-expected contraction in the employment market have appeared. The November ISM manufacturing index recorded 49%, down 1.2 percentage points from 50.2% in the previous month. The drop below the 50% threshold, which separates expansion from contraction, also affected investor sentiment. New orders, a leading indicator of manufacturing conditions, fell 2.0 percentage points to 47.2% compared to the previous month. The production index decreased by 0.8 percentage points but remained above the threshold at 51.5%. Customer inventories rose 7.1 percentage points to 48.7%, while order backlogs fell 5.3 percentage points to 40.0%. Customers purchasing products from manufacturers are rapidly accumulating inventory, while new orders are declining.

Employment, which had supported optimism about the U.S. economy, is now wavering. Kim Ilhyuk, a researcher at KB Securities, explained, "The weakening employment market is also evident in the continuing unemployment claims," noting, "Unemployment claims reached 1,608,000, exceeding the forecast of 1,573,000."

He added, "Continuing unemployment claims bottomed out at 1,347,000 at the end of September but have increased by 260,000 in just nine weeks," forecasting, "If the trend continues, it will surpass pre-COVID-19 pandemic levels in the first quarter of next year."

The KOSDAQ index also closed down 1.03% (7.64 points) at 732.96 compared to the previous trading day. The index opened at 740.13, down 0.06% from the previous day. In the KOSDAQ market, foreign and institutional net sales were also significant. Individuals alone bought stocks worth 274 billion KRW, while foreign and institutional investors sold 112.4 billion KRW and 154.5 billion KRW worth of stocks, respectively.

Among the top market capitalization stocks, all closed lower. EcoPro BM (-4.52%), Celltrion Healthcare (-2.44%), L&F (-1.34%), Kakao Games (-2.54%), HLB (-4.07%), EcoPro (-5.30%), Pearl Abyss (-0.22%), Lino Industrial (-1.53%), Celltrion Pharm (-3.11%), and Cheonbo (-1.29%) also declined.