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The KOSPI and KOSDAQ also plunged as the US central bank (Federal Reserve) hinted at the possibility of reducing the size of its asset purchase program (tapering) within this year. For the first time in four months, the KOSPI fell below the 3200 line and the KOSDAQ level fell below the 1000 line.
On the 19th, the KOSPI fell 61.100 points (1.93%) to 3097.83 and the KOSDAQ plunged 29.93 points (2.93%) to 991.15, respectively.
Even at the beginning of the market, the market shock was not as big as the US fears of an early taper. On this day, the KOSPI started trading at 3140.01, 18.92 points lower than the battlefield, and tried to reduce the decline and remained flat.
However, from 10:45 am, the index started to flow, increasing the drop to the 1.5% level, and it fell further at the end of the market and even gave up the 3,100 line.
Institutions and foreigners led the decline. The two entities sold 416 billion won and 328.9 billion won worth, respectively, on the KOSPI. Individuals alone bought 800.8 billion won, but it was not enough to prevent the index from falling. Program trading was dominated by selling 126 billion won.
On the KOSDAQ, foreigners and institutions net sold 149.1 billion won and 102.1 billion won worth of stocks, respectively. Individuals bought 265.5 billion won worth.
The sell-off by institutions and foreigners was due to the fact that last night’s minutes of the Federal Open Market Committee (FOMC), released last night, included content suggesting the possibility of tapering within the year. According to the minutes of the FOMC, most participants noted that “it was appropriate to reduce the rate of asset purchases because they saw that the Committee’s criteria for ‘substantial further progress’ would be met if the economy develops broadly as expected.”
However, Fed members were divided on the job market, a prerequisite for tapering. There were those who said that employment would recover enough to reduce asset purchases in the next few months and that the tapering should be delayed until early next year as the job market recovery is not yet sufficient.
Just before the announcement of the FOMC minutes, St. Louis Federal Reserve President James Bullard told MarketWatch that “the Fed wants to complete the tapering by the first quarter of next year.” He also maintained the view that the fourth quarter of next year would be a good time for the Fed to raise rates to zero.
All major sectors on the KOSPI fell, except for banks. In particular, machinery, steel and metal, construction, and transportation and warehouses recorded a decline of more than 4%. As Kakao Bank rose nearly 9%, banks rose 7.02%.
Among other stocks with the highest market cap, SK Bioscience rose 4.52% and Kakao rose 0.69%. Among the stocks that fell, POSCO, Kia, Hyundai Motor, and Samsung SDI had the biggest declines.
Among the top stocks by market cap on the KOSDAQ, Pearl Abyss, L&F, Hugel, Reno Industrial, and EcoproBM rose, but SK Materials, CJ ENM, Celltrion Pharm, Hugel, Celltrion Healthcare, and Studio Dragon fell out.
In the Seoul Foreign Exchange Market, the won-dollar exchange rate finished trading at 1,176.20, up 8.19 won (0.70%) from the previous day.
By Han Kyung-woo, reporter at Hankyung.com case@hankyung.com
