KOSPI Closes Lower Amid Expectations of U.S. Rate Hike; KOSDAQ Edges Up
KOSPI Index
The KOSPI index closed at 2,609.50, down 0.62%.
Over the past weekend, the New York Stock Exchange fell due to profit-taking ahead of the holiday, while major European stock markets rose amid the digestion of the ECB’s interest rate hike and the advancement of defensive stocks.
The KOSPI index started the day at 2,618.06, gradually expanding its losses after forming a mid-day high at 2,619.44 in the early market. The index moved around the 2,605 line in the morning.
Around noon, the index recovered to the 2,610 line but expanded its losses again in the afternoon, being pushed back to 2,600.49 and forming a mid-day low. The index, which partially recovered some of its losses in the late market, eventually closed the market at 2,609.50.
The market closed lower as profit-taking sales were made due to recent short-term overheating concerns, amid a dominant wait-and-see attitude ahead of the U.S. stock market holiday.
Over the weekend, hawkish remarks from U.S. Fed officials also acted as a burden. Foreigners and institutions led the index’s decline with net selling. Foreigners turned to selling in just one day, and institutions net sold for four consecutive trading days.
In particular, profit-taking sales were seen centered around secondary battery-related stocks, which had recently shown noticeable increases. LG Energy Solution (-4.59%) closed sharply lower due to news such as the planned stock sale of its largest shareholder, LG Chem.
On the other hand, stocks related to Ukraine’s reconstruction, construction machinery, construction, modular housing, railways, and nuclear power generation showed strength ahead of the Ukraine Reconstruction Conference. Defense industry-related stocks also showed strength ahead of President Yoon’s visit to Vietnam due to expectations for defense exports.
As the U.S. Fed’s June FOMC regular meeting concluded, some Fed officials made hawkish remarks over the weekend.
Thomas Barkin, President of the Federal Reserve Bank of Richmond, argued that inflation is still too high and more interest rate hikes are needed. Christopher Waller, a Fed director, mentioned that policy interest rates are affecting some parts of the economy, the labor market is still strong, but core inflation is not moving, so more tightening may be needed to lower it.
Major Asian stock markets in Japan, China, Taiwan, and Hong Kong also closed lower.
In terms of supply and demand, foreigners and institutions net sold 359.5 billion and 78.7 billion, respectively, while individuals net bought 430.7 billion. In the futures market, foreigners and institutions net sold 2,811 contracts and 1,385 contracts, respectively, while individuals net bought 2,884 contracts.
The won-dollar exchange rate recorded 1,282.0 won, up 10.1 won from the previous trading day.
The yield on the 3-year government bond fell 0.2bp from the previous trading day to 3.583%, and the 10-year yield fell 2.4bp from the previous trading day to 3.633%.
The 3-year government bond futures closed at 103.90, up 2
KOSDAQ Index
The KOSDAQ index closed at 888.61, up 0.07%.
Over the past weekend, the New York Stock Exchange fell due to profit-taking ahead of the holiday, and the KOSDAQ index started the day at 888.52, slightly stronger.
The index quickly turned to a decline, expanding its losses to form a low at 881.14. It turned to an increase in the morning, forming a mid-day high at 889.49, but then turned to a decline again, being pushed below the 884 line in the afternoon. After gradually recovering some of its losses, the index eventually closed the market at 888.61.
While there was a decline in the mid-market due to profit-taking sales following recent short-term increases, the index rose for the third consecutive day as some top market cap stocks continued to strengthen amid individual net buying. However, net selling by foreigners and institutions limited the increase.
In terms of supply and demand, individuals net bought 229.4 billion, while foreigners and institutions net sold 201.6 billion and 11.8 billion, respectively.
Top market cap stocks on the KOSDAQ showed a predominance of rising stocks. Alteogen (+5.50%), Posco DX (+4.87%), EcoPro (+4.32%), Dongjin Semichem (+2.40%), WCP (+1.94%), Caregen (+1.76%), SM (+1.11%), Classis (+1.10%), Reno Industrial (+0.81%), EcoPro BM (+0.38%), Pearl Abyss (+0.20%), and JYP Ent. (+0.07%) all closed higher. On the other hand, Kakao Games (-3.54%), HLB (-3.10%), L&F (-3.02%), HPSP (-3.02%), Celltrion Pharm (-2.40%), Celltrion Healthcare (-1.67%), Chonbo (-0.30%) closed lower.
In terms of industry, there were mixed increases and decreases. Finance (+3.17%), construction (+2.46%), transportation (+1.50%), non-metal (+1.08%), metal (+0.74%), food and tobacco (+0.71%), other services (+0.69%), computer services (+0.57%), IT parts (+0.28%), and information devices (+0.26%) industries all closed higher. On the other hand, other manufacturing (-1.82%), internet (-1.17%), broadcasting services (-1.17%), chemical (-0.85%), distribution (-0.80%), telecommunications broadcasting services (-0.78%), publishing/media reproduction (-0.68%), paper/wood (-0.61%), pharmaceutical (-0.50%), and semiconductor (-0.37%) industries all closed lower.
Investment Insight
With the stock market seemingly caught in a tug-of-war between the prospect of a U.S. rate hike and optimistic developments such as President Yoon’s visit to Vietnam, investors are advised to keep a close eye on these events. Notably, sectors related to the reconstruction of Ukraine and the defense industry should be on the radar for potential investment opportunities.