[Closing Market] KOSPI Barely Holds 6,000 Amid Foreign Selling

On the afternoon of Oct 14, KOSPI and KOSDAQ indices are displayed on the electronic board at the dealing room of Hana Bank headquarters in Jung-gu, Seoul. (Yonhap) On Oct. 14, the domestic stock market broke the chain of a steep five-day losing streak that had continued until the previous day, showing a lively start by soaring over 2% with rebound buying in the early trading session. Right after the opening, the KOSPI briefly recovered to around the 6,190 mark, raising expectations for a relief rally. However, the intraday flow failed to continue its upward trend and drew a sharp downward curve. Entering the afternoon, as foreign investors’ fierce selling barrage and institutional investors’ simultaneous selling poured out, all gains were surrendered, and the index faced the crisis of breaking below the 6,000 mark near the close of the market. Ultimately, the KOSPI closed at 6,008.81, down 26.54 points (-0.44%) from the previous trading day, having to be satisfied with barely defending the 6,000 mark. On this day, the index exposed extreme volatility, fluctuating between a high of 6,190.65 and a low of 5,944.65. The KOSDAQ market also could not avoid the direct hit of the KOSPI’s late-market plunge and the deterioration of investor sentiment. The KOSDAQ index closed at 823.88, dropping by 13.15 points (-1.57%) from the previous session. Like the KOSPI, it showed a rebound trend at one point in the morning, but the market situation rapidly changed to a selling dominance in the afternoon. Simultaneous Selling by Foreign and Institutional Investors Versus Retail Investors’ Defensive Battle The decisive agents of the stock market decline on this day were undeniably foreign investors. Their net buying stance in the early market did not last long, and they increased the intensity of their selling bomb as the afternoon session progressed. Foreign investors net sold a massive 1.1796 trillion won ($907.38 million) worth of shares in the KOSPI market, strongly dragging the index down. Following the previous day, an indiscriminate exodus centered on large-cap semiconductor stocks crushed the upper bound of the index. Institutional investors also joined the downward pressure on the index by net selling approximately 181.1 billion won ($139.31 million). They attempted some low-point buying early in the session, but it was far from enough to absorb the massive volume from foreign investors. On the other hand, as the index plummeted and the sense of crisis over the 6,000 mark heightened, retail investors alone brought in massive low-point buying, recording a net purchase of 385.3 billion won ($296.38 million) and exerting all their strength to support the downward defense line. In the KOSDAQ market, retail investors net bought 385.3 billion won, but foreign and institutional investors net sold 217.2 billion won ($167.08 million) and 181.1 billion won, respectively. Overall Weakness of Top Large-Cap Stocks Samsung Electronics closed at 232,000 won, the same level as the previous trading day. Making the early rebound attempt meaningless, foreign selling volume poured out intensively late. SK hynix collapsed to 1,419,000 won (-1.66%), suffering a shock of capital outflow exceeding a whopping 10%. This was the primary cause that rapidly froze the investment sentiment across the entire semiconductor sector. Top large-cap stocks by market capitalization in the KOSPI also could not avoid the overall weakness of the index. Hyundai Motor (-0.48%), and Kia, along with other major core blue-chip stocks, also failed to maintain their early upward trend, with most turning weak or expanding their drops as they closed. SK Square (-0.58%), Samsung Biologics (-1.99%), and KB Financial Group (-1.97%) showed weakness, while LG Energy Solution (2.93%) and Samsung Electro-Mechanics (0.81%) closed higher. In the KOSDAQ market, top pharmaceutical, biotech, and technology stocks like Alteogen and Rainbow Robotics, along with large-cap secondary battery stocks such as Ecopro BM and Ecopro, unanimously turned weak. In the KOSDAQ market as well, simultaneous selling volumes from foreign and institutional investors emerged, exerting heavy downward pressure on the overall index. Ecopro (3.29%) and Ecopro BM (2.92%) rose, whereas Jusung Engineering (-8.21%) and Wonik IPS (-6.83%) plummeted. Won-Dollar Exchange Rate Closes at 1,338.3 Won, Down 6.8 Won from Previous Closing Price Although the stock market showed an unstable appearance by turning downward near the close, a dollar weakness atmosphere fortunately flowed into the foreign exchange market, leading the exchange rate to show a downward stabilizing trend. On this day in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,338.3 won, dropping by 6.8 won from the previous closing price and shifting to a decline. Despite the massive exodus of foreign capital from the domestic stock market, the exchange rate maintained a relatively stable flow in the mid-1,330 won range as global dollar weakness pressure and vigilance from authorities interlocked. On Oct. 14, the domestic stock market seemed to put an end to the five-day losing streak by showing a rebound of more than 2% in the early session, but it ultimately surrendered to the indiscriminate ‘sell’ offensive of over 1 trillion won by foreign investors. In particular, the fact that the two top semiconductor stocks, Samsung Electronics and SK hynix, pushing the index down to barely hang onto the 6,000 mark, demonstrates that the market’s resilience has been severely weakened. To defend against further declines in stock prices in the future, it is a phase where a practical signal of trust recovery in the semiconductor sector, along with the calming of foreign supply and demand, is desperately required.