Investor Sentiment Frozen by Uncertainty in US Interest Rates... Stock Market Experiences Largest Drop This Year

KOSPI Drops 2.5%... KOSDAQ Plummets 3.9%
Foreigners Net Sell 1.6 Trillion Won in Futures Market
Due to SVB Bankruptcy and February CPI Caution Sentiment

As foreigners poured out sell orders in the domestic stock market, the KOSPI and KOSDAQ indices ended the session down by 2% and 3% respectively. Both KOSPI and KOSDAQ recorded their largest declines so far this year.

On the 14th, the KOSPI plunged 2.56% (61.63 points) from the previous trading day to 2348.97. The KOSPI started the day at the 2390 level, down 0.84%, but heavy selling by foreigners and institutions during the session led to a sharp decline. Foreigners sold stocks worth 638 billion KRW, while institutions turned to net buying near the end of the session, purchasing stocks worth 21.8 billion KRW. Individuals were the only net buyers, acquiring stocks worth 567.7 billion KRW. Foreign investors also showed negative sentiment toward risk assets by net selling futures worth 1.61 trillion KRW.

Lee Kyung-min, a researcher at Daishin Securities, said, “Despite global financial authorities stating that the possibility of further deterioration of the Silicon Valley Bank (SVB) crisis is low, investment sentiment toward Asian markets continued to worsen. The scheduled release of the February Consumer Price Index (CPI) tonight likely increased market volatility.” The core CPI for February is expected to ease to 5.5% from 5.6% in January. Lee added, “However, if the CPI is reported at a level similar to January’s, concerns about interest rate hikes will reemerge, leading to increased short-term market volatility.”

On the day, the won-dollar exchange rate closed at 1311.1 won, up 9.3 won from the previous day. The SVB crisis was gradually contained, possibly limiting its impact on the interest rate hike trajectory, while caution ahead of the February CPI data contributed to the rise. Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, “The foreign exchange market showed relative stability, and it seems market attention has shifted from SVB to inflation data.”

Top market capitalization stocks also ended the session lower across the board. Samsung Electronics closed down 1.67% at 59,000 won. LG Energy Solution (-2.66%), SK Hynix (-3.8%), Samsung Biologics (-0.77%), Samsung SDI (-1.76%), LG Chem (-1.81%), Hyundai Motor (-2.84%), NAVER (-3.21%), and Kia (-3.17%) also declined.

By sector, financial stocks continued their weakness due to the SVB crisis impact. KB Financial fell more than 3.78%, while Hana Financial Group (-3.86%) and Shinhan Financial Group (-2.64%) also showed significant declines.

The KOSDAQ index started the day down 0.06% from the previous session but saw its losses deepen during the day, plunging nearly 4%. The index closed at 758.05, down 3.91% (30.84 points) from the previous day. In the KOSDAQ market, foreigners and institutions sold stocks worth 244.1 billion KRW and 261.2 billion KRW respectively, while individuals were the sole net buyers with purchases worth 510.3 billion KRW.

Among the top market capitalization stocks, all declined except for Ecopro (2.63%) and SM Entertainment (1.86%). Ecopro BM fell more than 3.2% to trade at 196,500 won, while Celltrion Healthcare (-2.89%), L&F (-3.81%), HLB (-5.9%), Kakao Games (-0.81%), and Celltrion Pharm (-4.99%) also dropped.