[2024 Stock Market Review] KOSPI Sways Amid External Winds This Year, Finally Falls Below 2400 Point Mark

KOSPI Closes Below 2400 on Last Day of the Year
KOSPI Falls 9.6% This Year, Underperforming Major Global Markets
Foreign Selling Amid Political Uncertainty and Samsung Electronics Weakness Drag Stocks Down

The KOSPI ultimately failed to hold the 2400 level and closed out 2024. While the KOSPI showed strength in the first half of the year due to expectations of a value-up program, it struggled amid various external shocks in the second half, showing a sluggish trend that contrasted with the U.S. stock market, which set record highs and demonstrated dominant strength. Political uncertainty, sustained foreign selling after the second half, and concerns about the leading stock Samsung Electronics are cited as factors behind this year’s market underperformance.

On the last trading day of 2024, the KOSPI closed at 2,399.49 points, down 5.28 points, while the KOSDAQ ended the day at 678.19 points, up 12.22 points. Employees are walking below the price ticker board at the entrance of the Korea Exchange Seoul Office in Yeouido, Seoul. Photo by Heo Young-han

According to the Korea Exchange on the 31st, the KOSPI closed its last trading day of the year at 2399.49, down 0.22% from the previous session. Compared to the end of last year, the KOSPI fell 9.6%. The KOSDAQ closed at 678.19, up 1.83% from the previous session but down 21.7% compared to the end of last year.

The KOSPI started the year at 2669.81 and rose in the first half on expectations for the value-up program, reaching a yearly high of 2891.35 on July 11. However, from August onwards, concerns about a global economic recession, the yen carry trade, the Trump trade, and ongoing political uncertainty dragged the KOSPI down. The KOSPI rose 3.6% in 2021, fell 24.9% in 2022, rebounded with an 18.7% increase last year, but returned to a downward trend this year.

Kang Jin-hyuk, a researcher at Shinhan Investment Corp., analyzed, "The KOSPI and KOSDAQ ended the year with disappointing performances, down 9.6% and 21.7% respectively compared to the start of the year. Notably, the KOSPI declined for six consecutive months, marking the longest losing streak since the 2008 financial crisis, and except for June, when the KOSDAQ showed slight gains, and December, when the closing price matched the previous month, the KOSDAQ fell in seven out of nine months."

The KOSPI also underperformed compared to major global stock markets. It rose 5.4% in the first half, ranking 12th among 21 countries (G20 plus Taiwan), but fell 14% in the second half, dropping to 20th place, nearly at the bottom.

Lee Woong-chan, a researcher at iM Securities, stated, "The domestic stock market fell about 9% in Korean won terms and a staggering 19% in U.S. dollar terms this year. Even excluding the exceptionally strong U.S. market, the performance was disappointing compared to major global markets. In the first half, the market kept pace with global stocks due to value-up policies and AI semiconductor expectations, but in the second half, the semiconductor winter theory, concerns over Samsung Electronics’ competitiveness, the risk of Donald Trump’s election, and domestic political uncertainty led to a clear pattern of a strong first half and weak second half."

Continued foreign selling in the second half acted as a constraint on the KOSPI’s rebound. Foreign investors were net buyers of 24.1 trillion won in the securities market from January to July but switched to net selling in August, offloading a total of 22.8 trillion won by year-end. Foreign investors, who had purchased 11.3 trillion won in the securities market last year, only net bought 1.3 trillion won this year. Their share of KOSPI market capitalization fell from 32.9% at the end of last year to 32.4%. Samsung Electronics was the most sold stock by foreigners, with net sales of 10.5197 trillion won. The most purchased stock was Hyundai Motor, with net buying of 2.7418 trillion won, followed by SK Hynix at 1.6862 trillion won. Lee said, "Foreign investors who bought financial and automotive stocks sold large amounts of Samsung Electronics in the second half, and individual investors also left to seek alternatives such as the U.S. stock market. As investors left, the forward price-to-earnings ratio (PER) fell to the low 8 times."

The leading stock’s weakness contributed to the overall market slump. Samsung Electronics, the market leader, struggled amid earnings concerns, attracting concentrated foreign selling and becoming a drag on the index. Samsung Electronics fell 32.23% this year. On July 11, when the KOSPI hit its yearly high, Samsung Electronics reached a 52-week high of 88,800 won. However, it weakened afterward due to poor earnings and falling behind in the high-bandwidth memory (HBM) competition, dropping to the "40,000 won electronics" level last month. Samsung Electronics closed the year at 53,200 won. Its market capitalization decreased by about 151 trillion won, from 468.6279 trillion won at the end of last year to 317.5924 trillion won. The KOSPI’s total market capitalization shrank by 163 trillion won compared to the end of last year, largely due to the decline in Samsung Electronics’ market cap.