[Opening Market] KOSPI Falls More Than 2% Right After Open

The KOSPI and KOSDAQ indices are displayed on the electronic board at the dealing room of Hana Bank headquarters in Jung-gu, Seoul, on the morning of Oct. 20. (Yonhap) The domestic stock market is showing an unstable trend on Oct. 20, starting lower despite the news of a rebound in some technology stocks in the United States New York stock market overnight. The KOSPI index started lower at 5,733.57 on this day, down 34.44 points (0.60%) from the previous trading day, and has since expanded its decline to show a sharp drop in the 2% range as selling volume from foreigners and institutions emerged in early trading. As of 9:15 a.m., the KOSPI stood at 5648.50, down 119.51 points (2.07%) from the previous trading day, and by 9:25 a.m., it was pushed down to 5640.32, dropping by 2.21%. The index, which had recovered the 5,700 mark by achieving a V-shaped rebound on the previous trading day, is seen increasing volatility as it faces selling pressure again. The KOSDAQ index is also participating in the weak trend, opening the market at 805.37, down 3.55 points (0.44%) from the previous trading day. Foreigners and Institutions Lead Selling… Individuals Buy at Low Prices As of 10:00 a.m. in the Securities Market (KOSPI), foreigners and institutions are simultaneously pouring out selling volume, abruptly changing from the buying dominance of the previous day, and a supply and demand battle is taking place as individual investors step in to buy at low prices in response. Foreign investors are exerting downward pressure on the index, recording net sales of approximately 190 billion won (about $142.96 million) in the Securities Market as of 10:00 a.m. They are also reflecting a risk asset aversion sentiment by showing selling dominance in the KOSPI 200 futures market. Institutional investors are leading the index correction, showing net sales of around 180 billion won centered on financial investments, investment trusts, and pension funds. Individual investors are supporting the downside by recording net purchases of approximately 370 billion won, using the expanding decline of the index in early trading as a low-price buying opportunity. In the KOSDAQ market, while foreigners and institutions are showing selling dominance, a situation is unfolding where individuals are solely accumulating buying volume to defend against an additional sharp drop in the index. Individuals are solely net buying 172 billion won, while foreigners are net selling 103 billion won, and institutions are net selling 68 billion won. Weakness in Large-Cap Semiconductor Stocks Burdens the Index… KOSDAQ Stocks Also Weak In the aftermath of AI and semiconductor-related stocks showing a mixed trend in the New York stock market overnight, large-cap stocks, including top-tier semiconductor leading stocks in the domestic market capitalization, are uniformly failing to escape the weak zone. Samsung Electronics is recording a decline rate of around 1% compared to the previous trading day and is engaging in a battle near the 220,000 won mark. It appears to be receiving downward pressure as selling pressure concentrated in early trading. SK hynix is expanding the index decline, showing a relatively large drop of around 3% to 4% compared to the previous trading day due to the impact of controversy over the profitability of global AI infrastructure investments and the emergence of profit-taking sales. The fact that buying volume has not sufficiently flowed into domestic semiconductor stocks despite the rebound of United States technology stocks is interpreted as being because uncertainties surrounding the growth expectations of the global artificial intelligence (AI) industry, investment costs, interest rates, and risk preferences still remain. Most of the top blue-chip stocks in KOSPI market capitalization, such as Hyundai Motor and LG Energy Solution, are showing a weak trend. The majority are falling, including SK Square (2.95%), LG Energy Solution (-2.43%), Samsung Electro-Mechanics (-2.74%), Hyundai Motor (-1.99%), KB Financial Group (-0.55%), and Samsung Life Insurance (-1.02%). In the KOSDAQ market as well, major secondary battery and bio stocks that showed strength on the previous day, such as Ecopro BM and Alteogen, have uniformly reversed to a decline as they hit profit-taking sales, repeatedly engaging in a battle around the 800 mark. Most are on a downward trend, including Alteogen (-2.30%), Ecopro (-3.10%), Ecopro BM (-4.49%), Jusung Engineering (-2.63)%, Rainbow Robotics (-1.46%), and HLB (-1.86%). Whether the Downward Trend of Won/Dollar Exchange Rate Continues Attracts Interest   In the Seoul Foreign Exchange Market on this day, the won/dollar exchange rate started trading at 1,329.00 won as of 9:00 a.m. Previously, the exchange rate showed a downward trend for three consecutive trading days, and during intraday trading on Oct. 20, it went down to the 1,325 won range, recording a low level for the first time in about two years. A drop in the exchange rate means an increase in the value of the won. This can help lower import prices and dollar-denominated costs, but it can also be a burden for export companies in terms of converted sales. On the other hand, the rise in international oil prices due to tensions in the Middle East and the rise in United States Treasury yields are factors that can stimulate demand for the dollar. Because of this, whether the strong won will continue during intraday trading or whether global risk aversion sentiment will change the direction of the exchange rate is of interest to the market. Market specialized institutions diagnose that as the KOSPI is in a phase of expanding its intraday decline after starting lower at the 5,733 mark, it is necessary to focus on short-term risk management while closely watching the cash and futures trading trends of foreigners and whether there is additional upward pressure on the exchange rate. On the morning of this day, the domestic stock market reacted more sensitively to the burdens of geopolitical anxiety, rising interest rates, and selling by foreigners and institutions rather than the positive material of the rebound in United States technology stocks. Low-price buying by individuals can support the lower end of the index, but if the foreign selling trend does not calm down, it will not be easy to secure the sustainability of a rebound. Stock market experts advise that when judging future market conditions, one should comprehensively look at changes in the selling scale of foreigners, whether the declines of Samsung Electronics and SK hynix shrink, whether major KOSDAQ growth stocks rebound, and the movements of the won/dollar exchange rate.