On the 19th, the Korea Composite Stock Price Index (KOSPI) fell by nearly 2%. The outcome of the U.S. Federal Reserve's (Fed) last monetary policy meeting this year and Chair Jerome Powell's "hawkish" remarks dampened investor sentiment in the domestic stock market. On this day, 73% of the 940 KOSPI-listed stocks saw their prices decline.
The KOSPI index closed at 2,435.93, down 48.80 points (1.95%) from the previous trading day. The index started at 2,426.55, down 57.88 points (2.33%) compared to the previous trading day, and even fell to 2,423.59 during the session. The transaction volume was limited to 8.29 trillion won.
Both institutions and foreigners contributed to the index decline with net sell-offs of 509.4 billion won and 434.1 billion won, respectively. Notably, foreigners had net purchased 267.6 billion won in the previous day's securities market (KOSPI) but reversed to a "sell" position within a day. Individuals made net purchases of 802.8 billion won.
The shock from the U.S. Federal Open Market Committee (FOMC) meeting on Dec. 12 led to a contraction in investor sentiment in the domestic stock market. The Fed lowered the benchmark interest rate by 0.25 percentage points, as expected by the market, but reduced the number of rate cuts for next year from an earlier estimate of four to two in the "dot plot."
The hawkish rate cut resulted in sharp declines across the three major indices of the New York Stock Exchange. The Dow Jones Industrial Average fell by 2.58%, while the Standard & Poor's 500 Index and the Nasdaq Composite Index dropped by 2.95% and 3.56%, respectively. Prior to the KOSPI opening, a decline of about 3% was anticipated.
The strong dollar phenomenon, due to retreating expectations for monetary easing, is also acting as a negative factor for the domestic stock market. As soon as the Seoul foreign exchange market opened, the won-dollar exchange rate surged by 17.5 won per dollar. The won-dollar exchange rate exceeding 1,450 won during the session is the first time since the 2009 financial crisis.
Another variable noted for the day was the decision to keep Japan's key interest rate unchanged. Earlier, there were concerns that if the Bank of Japan were to raise interest rates, it would lead to further foreign investor fund exits due to the unwinding of the yen carry trade (borrowing yen at low interest rates to invest in high-value assets).
Among the KOSPI stocks, 73% or 684 of the 940 stocks saw their prices decline. In particular, Samsung Electronics and SK Hynix, ranked first and second by market capitalization on the KOSPI, plummeted by 3.28% and 4.68%, respectively, due to worsening concerns about semiconductor performance, including disappointing results from U.S. Micron Technology.
Additionally, LG Energy Solution, Samsung Biologics, Hyundai Motor, Celltrion, and Kia, among the top 10 market capitalization stocks on the KOSPI, all closed weakly. However, the strong dollar boosted investor sentiment in the shipbuilding sector, leading to a more than 5% increase in HD Hyundai's stock price.
The KOSDAQ index also closed lower, finishing at 684.36, down 13.21 points (1.89%) from the previous session. The index opened at 682.53, down 15.04 points (2.16%), and even dipped below the 680 mark during the session. Institutions and foreigners sold net amounts of 113.8 billion won and 19.9 billion won, respectively, leading to the index decline.
Similar to the KOSPI, more than 73% of the total listed stocks in the KOSDAQ, or 1,247 stocks, saw their prices drop. In particular, as concerns about persistent high interest rates emerged, the stock prices of leading bio stocks such as Alteogen, HLB, and Rigakembaio recorded widespread losses. The failure to pass the Biosecurity Act in the United States also had an impact.
Meanwhile, in the declining market, political theme stocks surged. In particular, the shares of Kolon Mobility Group, classified as a theme stock tied to Chair Woo Won-sik, continued to rise sharply. The Kolon Mobility Group was mentioned as a theme stock because both Kolon's CEO An Byeong-deok and Chair Woo were born in 1957 and are alumni of Kyungdong High School and Yonsei University.