Last month, the KOSPI index fell 1.5% in earned terms, but fell more than 8% in dollar terms. This is due to the rapid depreciation of the money won (the exchange rate of winning the dollar rises). If this trend continues, there is a possibility that foreign investors may continue to leave the stock market.
According to Bloomberg on the 5th, the rate of decline of the dollar-denominated KOSPI index last month was 8.1%, the biggest decline after the Hong Kong Hang Seng Index (-13.03%) and the Brazilian Bovespa Index (-8.54%) among the indices representative of 20 major countries. The KOSPI product based on the domestic currency was good, ranked 13 out of 20 indexes, but this phenomenon occurred because the amount of devaluation of the currency earned in February was greater than other currencies. The earn-dollar exchange rate rose 7.4% in February, showing a sharp depreciation of the earn.
When the dollar is strong and earnings are weak, foreign investors often sit back and try to sell Korean stocks and exit because the rate of return on investment in dollars falls. This is the reason why foreign net purchases in the stock market have declined from 6 trillion won in January to 400 billion won in February.
Experts predict that the gain will continue to weaken for now. Lee Gyeong-min, head of the investment strategy team at Daishin Securities, predicted, “In the short term, additional interest rate hikes will continue, and if the value of the dollar and bonds rebound further, overseas selling pressure will increase. “
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