As the exchange rate of the won against the U.S. dollar (won-dollar exchange rate) fluctuated around 1,480 won, the domestic stock market was also significantly shaken. This was the aftermath of the possibility of impeachment for the acting president, the first in constitutional history, following the Dec. 3 coup.
The KOSPI index closed at 2,404.77 on the 27th, down 24.9 points (1.02%) from the previous day. During the trading session, it fell as low as 2,388.33, breaking the 2,400 mark for the first time in four trading days. In the KOSPI market, individuals made net purchases of 214.6 billion won, while foreigners and institutions posted net sales of 173.3 billion won and 114.1 billion won, respectively.
The KOSDAQ index closed at 665.97, down 9.67 points (1.43%) from the previous day. In the KOSDAQ market, individuals also ventured to buy 159.9 billion won worth of stocks. Institutions and foreigners made net sales of 125.3 billion won and 27.6 billion won, respectively.
Among the KOSPI-listed stocks, 808 saw their prices decline, while only 115 rose. The semiconductor sector, including Samsung Electronics, performed relatively well. Stocks listed on the KOSDAQ market also fared poorly, with 1,287 declining and 347 showing an upward trend.
Political uncertainty is cited as the primary reason for the market's turbulence. The Democratic Party of Korea plans to put the impeachment motion against acting president Han Duck-soo to a vote in the National Assembly today, citing the postponement of the appointment of a constitutional judge.
The prevailing anxiety dried up transaction volumes. Consequently, even small selling volumes led to significant index drops. On this day, the KOSPI market's transaction volume amounted to 6.1941 trillion won, the lowest recorded this year. The KOSDAQ market's transaction volume also reached 6.1365 trillion won, nearly 2 trillion won lower than the yearly average of 8.417 trillion won.
Political instability led to a weak won. In the Seoul foreign exchange market, the won-dollar exchange rate surpassed 1,480 won for the first time in over 15 years. A surge in the exchange rate may prompt foreign investors worried about foreign exchange losses to exit the stock market.
Fortunately, the strength of the Chinese yuan calmed the won-dollar exchange rate. In the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,467.5 won, up 2.7 won from the previous day.
The impact of ex-dividend dates compounded the situation. Ex-dividend means that the right to receive dividends has disappeared. For companies that set the end of the year as the dividend 기준, only shareholders who held shares until the previous day can receive the settlement of account dividends. The stock price drops were pronounced for securities firms, with Samsung Securities down 8.13%, Kiwoom Securities down 9%, and Hanyang Securities down 10%.
This year, the domestic stock market has only one trading day left. The KOSPI index is also the lowest among the stock indices of the top 20 countries by market capitalization. The KOSDAQ index has seen a larger decline than the stock index of wartime Russia.
If the KOSPI index closes below 2,456 and the KOSDAQ index below 678 on the 30th, it will set an infamous record of six consecutive monthly declines based on monthly averages. Since 2000, the two stock indices have only shown six consecutive declines twice: after the collapse of the IT bubble in 2000 and during the global financial crisis in 2008.
As both the KOSPI and KOSDAQ indices are at the bottom of their valuations, there are views that expect a rebound. Lee Kyung-min, a Research Institute at Daishin Securities, noted that the KOSPI index recorded 12-month rises of 37.5% and 44.6%, respectively, after the consecutive declines in 2000 and 2008, adding, "Currently, the KOSPI index is going through its worst phase, and it is expected to enter a new phase by 2025."