The won-dollar exchange rate is the highest in 13 years and 4 months
KOSPI index fell for four days in a row
The KOSPI index fell for the fourth day in a row. This is attributable to increased risk-averse sentiment due to inflation shocks in Europe and concerns about monetary tightening by the US central bank (Fed). In the stock market, opinions are divided over whether the bear market rally (temporary rise in a bear market) that has been ongoing since last month will continue.
On the 22nd, the KOSPI closed at 2462.50, down 1.21%. The KOSPI index, which had risen to 2533.52 on the 16th, fell by about 70 points in four trading days. On the same day, the KOSDAQ index plunged 2.25% to 795.87. It is the first time since the 28th of last month that the KOSDAQ index fell below the 800 line.
Most of the top-cap stocks were bearish on the day. Samsung Electronics managed to secure ‘60,000 electronics’ by closing the transaction at 60,000 won, down 1.48%. In addition, LG Energy Solutions (-1.01%), SK Hynix (-1.24%), Samsung Biologics (-1.96%), Samsung SDI (-2.91%), and Naver (-1.01%) declined one after another. Only S-Oil (3.72%), the beneficiary of the raw material price hike, and SK Telecom (0.78%) and KT&G (0.86%), the defenders, showed strength.
This is attributable to a worsening of sentiment toward domestic risky assets as the won-dollar exchange rate reached its highest in 13 years and 4 months. Germany’s July Producer Price Index (PPI) shock has raised concerns about stagflation in Europe, putting pressure on the euro to weaken. The hawkish remarks by Fed officials ahead of the Jackson Hole meeting to be held on the 25th and 27th are also fueling the dollar’s appreciation.
The yield on the 10-year U.S. Treasury note rose 0.09 percentage points from the previous trading day to 2.976% on the 19th (local time) on the prospect of tightening tightening by the Fed. As tech stocks, which are sensitive to interest rates, weakened, the Nasdaq index fell 2.01% on the day.
However, it is worth noting that foreigners continue to buy domestic stocks despite the weak won. On that day, foreigners net bought 119.4 billion won in the stock market. Net purchases this month reached 2.56 trillion won. This is the opposite of the usual trend for foreigners to sell domestic stocks when the value of the dollar rises.
Ji-young Han, a researcher at Kiwoom Securities, said, “The KOSPI index is in the range of 2400-2500, but when converted into dollars, it has come down to the level of 1700, which is the period of the COVID-19 pandemic. he explained. “The fact that foreign ownership in the domestic stock market has fallen to the lowest level since the global financial crisis is also acting as a buying factor,” he added.
Analysts expect high volatility ahead of the Jackson Hole meeting and Fed Chairman Jerome Powell’s speech on the 26th. After the Jackson Hole meeting, there is a high possibility that the ‘stock market in the box’ will unfold for the time being. Dae-Jun Kim, a researcher at Korea Investment & Securities, said, “Since the stock market has risen nonstop for the past month, there may be some profit-taking properties.” said
By Seo Hyeong-gyo, staff reporter [email protected]