KOSPI Index
The KOSPI index closed at 2,604.91, down 0.18%.
The New York Stock Exchange was closed overnight for the Juneteenth National Independence Day holiday, and major European stock markets all closed lower amid economic uncertainty.
The KOSPI index started the day lower at 2,602.83. The index, which turned to a slight increase in the early market, formed an intraday high at 2,610.03. The index then turned to a decline, widening its losses and forming an intraday low at 2,596.82, pushed below the 2,600 line.
Although it reduced its losses to the 2,608 line in the morning, it increased its losses again, showing movement around the 2,600 line around noon. In the afternoon, the index, which showed fluctuations around the 2,605 line after partially recovering some of its losses, eventually closed the market at 2,604.91.
The index closed lower for the second day in a row, taking a breather amid the closure of the U.S. stock market. The domestic stock market was burdened as some Fed officials continued to make hawkish (preference for monetary tightening) remarks after last week’s Federal Reserve (Fed) June FOMC regular meeting.
The continuation of profit-taking sales due to recent short-term overheating concerns was also seen. Foreigners and institutions led the index’s decline with concurrent net selling. Foreigners sold net for two trading days in a row, and institutions for five trading days in a row. Foreigners also net sold in the futures market.
Expectations for easing U.S.-China tensions grew with U.S. Secretary of State Tony Blinken’s visit to China, and the index rebounded, but continued concerns about Fed tightening and profit-taking sales continued.
Last 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, and Christopher Waller, Fed Director, said that policy interest rates are affecting some parts of the economy and the labor market is still strong, but core inflation is not moving, so more tightening may be needed to lower it.
According to Reuters, U.S. Secretary Blinken and Chinese President Xi Jinping held talks at the People’s Congress in Beijing yesterday afternoon in the form of a meeting of government delegations from both countries, and the two announced that they had agreed to stabilize bilateral relations at this meeting.
President Xi said at the meeting that inter-state exchanges should always be based on mutual respect and President Xi said at the meeting that inter-state exchanges should always be based on mutual respect and sincerity, and expressed his expectation that Secretary Blinken’s visit would play an active role in stabilizing bilateral relations. The White House in the U.S. evaluated it as good progress, saying that they had a constructive conversation.
Meanwhile, the People’s Bank of China, China’s central bank, cut the one-year Loan Prime Rate (LPR), which effectively serves as the benchmark interest rate, by 0.1 percentage point to 3.55%. The five-year LPR was also cut by 0.1 percentage point to 4.2%. It was the first time in 10 months that the People’s Bank of China cut the LPR.
The market predicts that the purpose is to expand the supply of liquidity in the market and boost the economy, but the policy effect is not expected to be significant. Most of the major Asian stock markets closed lower, with Japan slightly up, while China, Taiwan, and Hong Kong fell.
In terms of supply and demand, foreigners and institutions net sold 281.2 billion and 135.3 billion respectively, while individuals net bought 409.3 billion. In the futures market, foreigners net sold 690 contracts, while individuals and institutions net bought 359 contracts and 670 contracts respectively.
The won-dollar exchange rate was recorded at 1,280.3 won, down 1.7 won from the previous trading day.
The yield on the three-year government bond fell 1.6bp from the previous trading day to 3.567%, while the 10-year yield rose 0.9bp to 3.642%.
The three-year government bond futures closed at 103.80, down 10 ticks from the previous trading day. Banks, financial investment, and pension funds net sold 5,386 contracts, 3,170 contracts, and 1,695 contracts respectively, while foreigners net bought 11,205 contracts. The 10-year government bond futures closed at 110.92, down 14 ticks from the previous trading day. Financial investment net sold 1,681 contracts, while foreigners net bought 1,493 contracts.
Most of the KOSPI market cap top stocks closed lower. POSCO FutureM (-2.48%), SK Innovation (-2.33%), Samsung SDI (-1.82%), LG Chem (-1.73%), POSCO Holdings (-1.66%), Kakao (-1.52%), Hyundai Mobis (-1.35%), Celltrion (-1.17%), LG Electronics (-0.96%), Kia (-0.73%), Hyundai Motor (-0.70%), Samsung Biologics (-0.65%), Samsung C&T (-0.65%), KB Financial (-0.62%), and NAVER (-0.05%) all closed lower. On the other hand, SK Hynix (+1.13%), Samsung Electronics (+0.28%), and Shinhan Financial Group (+0.14%) closed higher. LG Energy Solution remained flat.
Most sectors also closed lower. The steel and metal (-1.38%), insurance (-1.29%), construction (-1.19%), food and beverage (-0.79%), chemical (-0.69%), pharmaceutical (-0.67%), financial (-0.52%), electric gas (-0.41%), non-metallic mineral (-0.39%), securities (-0.27%), distribution (-0.24%), and textile and clothing (-0.21%) sectors all sectors all closed lower. On the other hand, the medical precision (+1.94%), transportation warehouse (+0.69%), transportation equipment (+0.58%), telecommunications (+0.42%), and electric electronics (+0.03%) sectors closed higher.
KOSDAQ Index
The KOSDAQ index closed at 886.41, down 0.25%.
The KOSDAQ index started the day lower at 886.47 amid the closure of the New York Stock Exchange for the Juneteenth National Independence Day.
The index, which initially increased its losses, soon rebounded and formed an intraday high at 891.00. The index then turned to a decline, widening its losses and forming an intraday low at 883.09 around noon. In the afternoon, the index recovered some of its losses to around 888, but again increased its losses, eventually closing the market at 886.41.
The index closed lower for the first time in three days, taking a breather amid the closure of the U.S. stock market and the emergence of profit-taking sales following recent index rises.
Foreigners and institutions led the index’s decline with concurrent net selling. Meanwhile, it was reported that short selling trading volume is increasing in the KOSDAQ market as signals of market overheating continue.
According to the media, the average daily short selling trading volume in the KOSDAQ market this month was recorded at
278.6 billion won (as of the 19th), an increase of 16.46% from last month (247.8 billion won).
In terms of supply and demand, foreigners and institutions net sold 23.8 billion and 70.7 billion respectively, while individuals net bought 114.7 billion.
Most of the KOSDAQ market cap top stocks closed lower. Alteogen (-4.35%), HLB (-2.13%), Celltrion Pharm (-2.09%), Cheonbo (-1.95%), EcoPro BM (-1.87%), Celltrion Healthcare (-1.84%), Kakao Games (-0.95%), EcoPro (-0.91%), L&F (-0.78%), HPSP (-0.66%), Caregen (-0.22%) all closed lower. On the other hand, POSCO DX (+8.71%), Clasis (+5.15%), Reno Industrial (+3.95%), SM (+2.52%), WCP (+2.05%), JYP Ent. (+1.98%), Pearl Abyss (+0.78%), Dongjin Semichem (+0.39%) closed higher.
Sector-wise, there was a mix of gains and losses. The food and beverage (-4.58%), other manufacturing (-2.33%), metal (-1.74%), IT parts (-1.53%), general electric electronics (-1.20%), paper/wood (-1.15%), construction (-1.11%), distribution (-1.07%), machinery/equipment (-0.97%), telecommunications services (-0.77%), transportation equipment/parts (-0.77%), finance (-0.77%), manufacturing (-0.72%) sectors all closed lower. On the other hand, entertainment/culture (+2.08%), software (+2.00%), computer services (+1.54%), IT S/W & SVC (+1.37%), medical/precision equipment (+1.09%), transportation (+0.92%), textile/clothing (+0.91%), publishing/media reproduction (+0.90%), digital content (+0.81%), broadcasting services (+0.64%), semiconductor (+0.57%) sectors closed higher.
TrendHub Investment Insights
- Gather Data: The recent market conditions in South Korea show a slight decline in the KOSPI and KOSDAQ indices. This is due to a variety of factors, including the US market holiday, Juneteenth, and the ongoing concerns about the tightening of monetary policy by the Federal Reserve. Additionally, there has been a surge in profit-taking sales due to recent market overheating.
- Analyze Data: The market is experiencing a cooling period after a period of rapid growth. The recent statements from Federal Reserve officials indicating a need for more interest rate hikes have put pressure on the market. However, the easing of tensions between the US and China following the meeting between US Secretary of State Antony Blinken and Chinese President Xi Jinping has provided some positive sentiment.
- Identify Opportunities: Despite the overall market decline, certain sectors have shown resilience. The medical precision, transportation storage, transportation equipment, and telecommunications sectors in the KOSDAQ market have all closed with gains. In the KOSPI market, the semiconductor industry, represented by SK Hynix, and the electronics industry, represented by Samsung Electronics, have also shown positive performance.
- Evaluate Opportunities: Companies within the resilient sectors could present potential investment opportunities. For instance, SK Hynix and Samsung Electronics in the semiconductor and electronics industries respectively, have shown strong performance despite the overall market decline.
- Investment Insight: Given the current market conditions, it may be prudent for investors to focus on sectors that have shown resilience in the face of overall market decline. While the market may be experiencing a period of adjustment, companies within the semiconductor, electronics, medical precision, transportation storage, and telecommunications sectors could present potential investment opportunities. However, as always, investors should conduct their own thorough research and consider their risk tolerance before making any investment decisions.
Please note that this insight is based on the current market conditions and is subject to change as new information becomes available.