It was a day when the KOSPI and KOSDAQ indexes rode a roller coaster. As concerns over U.S.-China trade tensions resurfaced, they weakened and then rebounded, but in the afternoon, as selling poured in amid a rise in the won-dollar exchange rate against the U.S. dollar, both stock indexes ultimately closed lower.
The KOSPI closed at 3,845.56, down 38.12 points (0.98%) from the previous day. The KOSPI opened at 3,835.79, broke through the 3,900 mark for the first time ever intraday, and climbed to 3,902.21. But it failed to extend the upswing and soon turned lower.
In the main board, only individuals posted a net purchase of 747.5 billion won. Foreign investors and institutions recorded net sales of 407.3 billion won and 397.3 billion won, respectively. In particular, institutions that had moved to "buy" turned to "sell" after the KOSPI broke its record high.
The KOSDAQ also finished at 872.03, down 7.12 points (0.81%) from the previous day. The KOSDAQ's trajectory was not much different from the KOSPI's. After a weak start, it broke through the 880 level for the first time since April last year and then fell.
On the KOSDAQ, foreign investors and institutions showed selling dominance of 122.5 billion won and 13.6 billion won, respectively, dragging the index down. Only individuals posted a net purchase of 170.2 billion won.
As the won-dollar exchange rate hovered above and below 1,440 won, it also weighed on the stock market. For foreign investors who have led gains in Korean stocks, a rise in the won-dollar rate results in FX losses.
Along with dollar strength driven by weakness in the Japanese yen and Chinese yuan, issues related to investment funds into the United States are cited as causes. Bank of Korea Governor Rhee Chang-yong assessed that the amount that can be raised over a year without shocking the FX market is $15 billion to $20 billion, but a plan is currently being discussed for direct investment of $25 billion per year for eight years.
Min Ji-hui, an analyst at Mirae Asset Securities, said, "The $25 billion per year currently under discussion exceeds the band (range) mentioned by the governor," and noted, "Coupled with negotiation stalemates, it led to won weakness."
On the KOSPI, the number of decliners was 609, more than double the number of gainers (260). On the KOSDAQ, decliners totaled 1,146, more than twice the gainers (489).
Semiconductors also failed to muster much strength. Shares of semiconductor materials, parts, and equipment corporations, including Samsung Electronics and SK hynix, fell. The secondary battery sector, including LG Energy Solution, which had rallied strongly the previous day, was also lower on disappointment with Tesla's overnight results.
With corporations' third-quarter (July–September) earnings season kicking off in earnest, the prevailing view is that share prices will move based on individual corporations' results for the time being. HD Hyundai Electric, which released results that beat market expectations right away, hit a fresh all-time high on the day.
Lee Jae-won, an analyst at Shinhan Investment & Securities, said, "In the end, the key will be earnings," and explained, "It is necessary to focus on third-quarter results of corporations and examine the details of each country's summit meetings, including the South Korea-U.S. tariff negotiations and the U.S.-China trade talks."