[MarketING] KOSPI Falls Below 2500 Amid Supply and Demand Instability

KOSPI Continues Four-Day Decline, Falls Below 2500
KOSDAQ Drops to 830 Level

The KOSPI continued its decline for the fourth consecutive day, breaking below the 2500 level. The KOSDAQ also fell nearly 2%, sliding down to the 830 level. This is attributed to weakened investor sentiment due to supply-demand instability, as many stocks that hit the lower limit price en masse the previous day continued to do so on this day. Amid the sharp decline, stock performance diverged based on earnings. Automobile stocks rose on Hyundai Motor's strong earnings, while secondary battery stocks showed weakness due to an earnings shock from Cheonbo.

KOSPI Ends Four-Day Losing Streak

On the 25th, the KOSPI closed at 2,489.02, down 34.48 points (1.37%) from the previous day. The KOSDAQ ended the session at 838.71, down 16.52 points (1.93%). The KOSPI fell below the 2500 mark for the first time in 12 trading days since the 7th of last month, continuing its four-day losing streak. The KOSDAQ also declined for four consecutive days, dropping to the 830 level for the first time in about a month.

[Image source=Yonhap News]

The mass lower limit price event that occurred the previous day continued on this day, expanding volatility due to supply-demand instability and pulling down the indices. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Most of the stocks that hit the lower limit price due to supply-demand issues yesterday also hit the lower limit price today, which weighed on the index," adding, "Foreign selling also increased amid the won-dollar exchange rate showing strength during the session."

On this day, foreigners net bought 8 billion KRW in the KOSPI market but sold 108.1 billion KRW in the KOSDAQ market. In the futures market, they sold 933.4 billion KRW, dragging the index down. Individuals net sold 700 million KRW in the KOSPI market and also sold 118.6 billion KRW in the futures market. However, they net bought 211.6 billion KRW in the KOSDAQ market. The won-dollar exchange rate ended at 1,332.2 KRW, down 2.6 KRW from the previous day, turning downward late in the session. During the day, it rose to 1,337.2 KRW, surpassing the previous day's intraday record high of 1,337.1 KRW, but concerns over intervention by foreign exchange authorities near market close led to a full reversal of gains and a decline to close.

The continued plunge of stocks that caused supply-demand instability due to mass lower limit price hits the previous day further intensified supply-demand concerns. Seonkwang, Sebang, Samchully, Daesung Holdings, Seoul Gas, and Dow Data all hit the lower limit price again on this day, while Harim Holdings and Daol Investment & Securities fell 13.31% and 9.92%, respectively.

Lee Kyung-min, a researcher at Daishin Securities, explained, "With leveraged funds increasing sharply this year, concerns over forced liquidation due to expanding downward pressure on stock prices have acted as a negative factor for investor sentiment."

Mixed Fortunes Based on Earnings Amid Sharp Decline

Amid the sharp market decline, stock prices showed mixed fortunes based on earnings. Automobile stocks rose on Hyundai Motor's strong earnings, while secondary battery stocks weakened due to Cheonbo's earnings shock.

On this day, Hyundai Motor closed at 201,000 KRW, up 4.74% from the previous day. This is the first time since September last year that Hyundai Motor's closing price exceeded 200,000 KRW. Kia and Hyundai Mobis rose 2.24% and 2.37%, respectively. Hyundai Motor's strong earnings appear to have lifted the group's stock prices. Hyundai Motor announced that its consolidated sales for the first quarter of this year reached 37.7787 trillion KRW, with operating profit of 3.5927 trillion KRW. Sales increased 24.7% and operating profit rose 86.3% compared to the same period last year.

In contrast, secondary battery stocks showed weakness due to Cheonbo's earnings shock. Cheonbo plunged 14.85%, while EcoPro BM, L&F, LG Energy Solution, and Samsung SDI fell 6.46%, 5.4%, 2.65%, and 2.75%, respectively.

The previous day, Cheonbo disclosed that its consolidated operating profit for the first quarter of this year was 1.637 billion KRW, down 90.92% from the same period last year. During the same period, sales decreased 50.15% to 47 billion KRW, and net profit fell 69.29% to 4.118 billion KRW.

Researcher Kim explained, "Secondary battery stocks plunged due to concerns over unfair trading crackdowns amid recent short-term overheating and the cooling of investor sentiment following the earnings shock."