US Stock Market Plunge and Foreign Investor Outflow... KOSPI and KOSDAQ Close Lower

Due to disappointing earnings from big tech companies and concerns over an economic slowdown, the US stock market plunged, and controversies over the reliability of governance in Korean companies expanded, leading the domestic stock market to close lower on the 25th.

On the 25th, the index is displayed on the electronic board in the dealing room of Hana Bank in Jung-gu, Seoul. Photo by Jo Yongjun jun21@

On that day, the KOSPI closed at 2710.65, down 48.06 points (1.74%) from the previous trading day. The KOSPI started at 2721.29, down 37.42 points (1.36%), and widened its losses. Individual investors bought stocks worth 825.4 billion KRW alone, but foreigners and institutions sold stocks worth 674.7 billion KRW and 156.5 billion KRW, respectively.

Among the top market capitalization stocks, NAVER (3.67%), LG Energy Solution (3.42%), Celltrion (3.00%), Samsung SDI (3.00%), POSCO Holdings (2.60%), and Kakao (2.53%) rose. In contrast, SK Hynix (-8.87%), Kia (-2.87%), Hyundai Motor (-2.71%), Samsung Life Insurance (-2.45%), LG Electronics (-2.04%), and Samsung Electronics (-1.95%) declined. Notably, semiconductor-related stocks showed a marked drop. SK Hynix saw sell-offs due to disappointment from raised earnings expectations.

By sector, steel and metals (1.62%), telecommunications (1.09%), services (0.77%), and pharmaceuticals (0.16%) rose. However, most sectors including machinery (-4.09%), food and beverages (-2.74%), electrical and electronics (-2.63%), medical precision (-2.55%), securities (-2.28%), and manufacturing (-1.92%) declined.

The KOSDAQ index recorded 797.29, down 16.96 points (2.08%) from the previous session. The index started at 802.28, down 11.97 points (1.47%), and failed to rebound. Foreigners and institutions net sold stocks worth 133.8 billion KRW. Individuals and institutions bought stocks worth 96.0 billion KRW and 50.4 billion KRW, respectively.

Among the top market capitalization stocks, EcoPro (3.34%), EcoPro BM (1.29%), and Celltrion Pharm (0.85%) rose. Most stocks such as EO Technics (-9.97%), Techwing (-9.63%), Alteogen (-9.52%), Silicon Two (-9.52%), Samchundang Pharm (-6.05%), Rainbow Robotics (-4.6%), and Lino Industrial (-4.01%) fell.

Lee Jaewon, a researcher at Shinhan Investment Corp., said, "The KOSPI was affected by foreign investor outflows due to the sharp drop in big tech stocks and the expanded decline after SK Hynix’s earnings announcement," adding, "With the added uncertainty of the presidential election, a preference for safe assets emerged." He also noted, "Although most sectors declined, telecommunications, healthcare, internet & gaming, and utility-related stocks rose."

Na Jeonghwan, a researcher at NH Investment & Securities, said, "Foreign investors showed net selling mainly in the information technology (IT) sector," and added, "Regarding the recent governance restructuring of the Doosan Group, controversy arose over the merger ratio between Doosan Bobcat and Doosan Robotics. The Financial Supervisory Service ultimately ordered a correction of the securities registration statement for the merger, and due to the expanded uncertainty and controversies over the reliability of governance in Korean companies, foreign investors net sold Doosan-related stocks and financial sector stocks as well."