On the 18th, the KOSPI started lower and extended losses in early trading, plunging sharply. As the war between the United States and Iran shows signs of dragging on and U.S. Government Bonds yields surge, investor sentiment toward risky asset has deteriorated rapidly. The U.S.-China summit ended, but contrary to market expectations, there was no tangible outcome.
At the start of trading, KOSPI 200 futures plunged, triggering a sell-sidecar on the Korea Exchange for the second straight session. A sell-sidecar is triggered when the KOSPI 200 futures index falls more than 5% for at least one minute.
On the day, the KOSPI opened at 7,443.29, down 49.89 points (0.67%) from the previous transaction day, but the decline deepened right after the open, pushing it down to the 7,140 level. As of 9:25 a.m., the KOSPI was down more than 3%, moving around the 7,250 level.
In the main board, foreigners are net sellers of 500 billion won, while individuals and institutions are net buyers. The national pension funds are also net buyers. As foreign funds flow out in large volume, the won has weakened past 1,500 to the dollar.
The KOSPI has been undergoing a sharp correction since breaking above 8,000 intraday on the 15th. So far this year alone, after the KOSPI topped 5,000, 6,000, and 7,000 for the first time ever, it went on to surpass 8,000, fueling concerns about a short-term overheating. Given the rapid short-term surge, the large pullback is seen as investors moving to lock in profits.
The surge in U.S. Government Bonds yields (falling bond prices) is also denting investor sentiment. The U.S. 2-year yield topped 4% annually, and the 10-year neared 4.6%. As Government Bonds yields jumped, appetite for risky asset slumped, and U.S. stocks also fell across the board over the weekend. The three major indexes each dropped more than 1%.
Kim Yun-jung, an analyst at LS Securities, said, "On worries that the war between the United States and Iran could be prolonged, international oil prices jumped sharply, and surging Government Bonds yields also hurt investor sentiment," and added, "As the index has recently been hitting a record high day after day, profit-taking has concentrated in tech stocks that have become sensitive to variables, widening the index's decline."
Semiconductor, nuclear power, power equipment, and Robotics stocks tied to the artificial intelligence (AI) ecosystem, which have led the index's rally, are falling across the board. SK Square is down more than 5%, and Hyundai Motor Group is also broadly lower. Hit by an earnings shock, HANMI Semiconductor is down more than 15%.
Heavy selling is also hitting the KOSDAQ market. The KOSDAQ opened at 1,122.57, down 7.25 points (0.64%). It was down more than 5% in early trading.