The Korean securities market, which seemed to be recovering from the impact of the Dec. 3 martial law incident, had to face the 'hawkish tendency' of the U.S. Federal Reserve (Fed). According to the dot plot released after the Federal Open Market Committee (FOMC) regular meeting, the Fed reduced the number of expected rate cuts in 2025 from four to two, with a 0.25 percentage point decrease each time. The market assessed that this means 'there will be no Santa rally.'
The KOSPI index started at 2511.08 on the 16th and ended the 20th at 2404.15, down 106.93 points (4.3%). The KOSDAQ index decreased by 31.5 points (4.5%) during the same period, closing at 668.31.
This week (23rd to 27th), the Korean securities market is expected to experience high volatility as the impeachment situation continues domestically and tensions rise ahead of the inauguration of former U.S. President Donald Trump.
Above all, due to the results of this FOMC, the won-dollar exchange rate is hovering over the 1450 won mark, which could act as a burden on the market due to rising bond yields.
Lee Kyung-min, a researcher at Daishin Securities, noted, 'The stability of bond yields and the dollar will likely determine the current and futures supply and demand of foreign investors and the rebound momentum of the KOSPI index.' He also acknowledged, 'Although aftershocks due to rapid volatility expansion are unavoidable, if the concentration of global liquidity towards the U.S. market eases, the KOSPI market, which has valuation attractiveness, could gain attention.'
It is also important to consider the year-end. Due to Christmas, stock markets in South Korea, the U.S., China, Hong Kong, and Europe will all be closed on the 25th. U.S. markets will close early starting from the regular trading session on the 24th (ending at 3 a.m. on the 25th, Korean time). The Chinese and Hong Kong markets will also close early on the 24th.
There is also a unique year-end event in South Korea. Specifically, sell-off volumes to avoid the capital gains tax for major shareholders could impact the market, as trades must be completed by the 26th, considering that settlement takes two trading days.
The same applies to year-end settlement of accounts dividends. For companies with a December fiscal year-end that set the dividend record date for December 31, shares must be purchased by the 26th to receive dividends. The 27th will be the rights expiration date, when voting rights at the regular general shareholder meeting and the right to receive dividends will be lost.
However, as more corporations adopt 'prior dividends, later investments,' it has become increasingly necessary to carefully examine the dividend record dates. These corporations set the dividend record date after the board meeting, allowing dividends to be determined before investments can occur, shifting the benchmark date for dividend eligibility from year-end (December 31) to 2-4 months before the regular general shareholder meeting. The timing varies by corporation.
Overall, there is an assessment that the impact of rights expiration and dividends expiration has weakened. Since last year, the criteria for major shareholders have been raised to a market capitalization of 5 billion won, and the dividend record dates have also diversified.
In last year's case, the closing prices on the rights expiration and dividends expiration days were higher than the prices three trading days before the dates for both the KOSPI and KOSDAQ indices. Expanding the view over the last five years, excluding the significant interest rate cut impact in 2022, an upward trend has been observed.