The domestic stock market, which had been thriving, plummeted on the first day of August, 1st. The KOSPI index, which had breached the 3,200 mark earlier this week (July 28), slipped back and barely defended the 3,100s after four trading days. The KOSDAQ index also fell by more than 4%.
August is generally a month when the KOSPI index performs poorly. Since 2007, the average KOSPI fluctuation rate in August has been -1.6%, the lowest of the year. Furthermore, as the strong Korean won and policy expectations that had driven KOSPI's rise weakened, downward pressure on the index increased. On this day, investors could not hide their disappointment over the government's tax reform plan to tighten stock market taxation standards in the wake of the impact of the South Korea-U.S. tariff negotiations, and the exchange rate of the Korean won against the U.S. dollar also surged.
On this day, the KOSPI index closed at 3,119.41, down 126.03 points (3.88%) from the previous trading day. The index opened at 3,210.32, down 35.12 points (1.08%) from the previous session, gradually widening its losses.
On this day, foreign investors and institutions pulled the index down with net selling. Foreign investors sold shares worth 656.5 billion won, and institutions sold 1.0716 trillion won. Individual investors bought 1.632 trillion won worth of stocks, which is interpreted as taking advantage of the price drop for bargain purchases.
On this day, among the top 50 stocks by market capitalization, all except Hanwha Ocean and Hanwha Systems were in the red. SK hynix and Hanwha Aerospace fell by 5.67% and 5.72%, respectively. LG Energy Solution, Samsung Biologics, Hyundai Motor Company, HD Hyundai Heavy Industries, KB Financial, and Kia also all declined.
Samsung Electronics, a major player in the semiconductor sector, closed at 68,900 won, down 3.50% from the previous trading day. On 28th of last month, it recovered to '70,000 Electronics' for the first time in 11 months due to a positive development related to Tesla orders but retreated back to the 60,000s after four trading days. The preferred stock of Samsung Electronics also fell by 2.95%.
Daehan Shipbuilding, which entered the KOSPI market on this day, finished trading at 92,400 won, up 42,400 won (84.8%) compared to the offering price of 50,000 won. In the afternoon, it surged to as high as 99,400 won, a 98.8% increase at one point. Considered a notable IPO in the second half of this year, Daehan Shipbuilding is the first 'trillion unit newcomer' to appear five months after LG CNS, which entered the KOSPI in February (offering price based on 59.972 trillion won). During the general subscription on the 22nd to 23rd, the competition ratio was 238.1 to 1, with about 17.8608 trillion won in deposits.
The KOSDAQ index closed at 772.79, down 32.45 points (4.03%) from the previous trading day. The index opened at 796.24, down 9.00 points (1.12%) compared to the previous day and widened the decline by over 4%. Individual investors sold a net of 250.6 billion won, while foreign investors and institutions sold 110.8 billion won and 141 billion won, respectively.
On this day, all of the top 50 stocks by market capitalization in the KOSDAQ ended lower. Alteogen closed at 422,000 won, down 30,000 won (7.05%) compared to the previous trading day. EcoproBM, HLB, Ecopro, PharmaResearch, LigaChem Biosciences, HUGEL, Peptron, Rainbow Robotics, and others also declined.
Han Ji-young, a researcher at Kiwoom Securities, noted, "The sharp drop in the stock market today is characterized by disappointment over the tax reform plan and adjustment for the index, which has risen significantly. In particular, since this tax reform plan includes a strengthening of the capital gains tax requirements for major shareholders, we are seeing a sluggish trend, particularly in large-cap KOSPI stocks and KOSDAQ, where individual buying had been concentrated."
In the Seoul foreign exchange market, as of 3:30 p.m., the won-dollar exchange rate recorded 1,401.4 won, up 14.4 won from the previous day. It is the first time the exchange rate has surpassed 1,400 won during the trading session since May 19 (peak price during trading was 1,401.3 won) two months ago.