KOSPI Index Soars by 5.66% on Expectations of Fed Interest Rate Hike Pause
The KOSPI index closed at 2,502.37, marking a 5.66% increase. This surge comes after the New York stock market experienced an uptick due to expectations of a pause in Fed interest rate hikes and a slowdown in US employment in October. Major European stock markets, however, closed with mixed results.
The KOSPI index opened strongly at 2,399.80, briefly hitting an intraday low of 2,395.03 before steadily climbing throughout the day. It reached a high of around 2,460 and closed at 2,502.37, its highest point for the day.
Foreigners and institutions simultaneously buying shares have led to four consecutive days of gains in the KOSPI index. The ban on short selling implemented by financial authorities has also contributed to the increase, exceeding 5%. Furthermore, improved investor sentiment can be attributed to the expectation that the Fed will halt interest rate hikes due to the sluggish employment growth in the US.
The Financial Services Commission and the Financial Supervisory Service have announced a complete ban on short selling in the domestic stock market from November 6 until the end of June next year. The expansion of the ban to include all stocks in the KOSPI, KOSDAQ, and KONEX is a result of the uncertain economic climate influenced by persistently high interest rates, geopolitical risks, and a global economic slowdown.
The US non-farm payrolls for October showed an increase of 150,000 jobs, which was lower than market estimates and the previous month’s figure. Consequently, US Treasury yields declined. The won-dollar exchange rate also fell to 1,297.3 won.
In terms of stock performance, the top stocks in the KOSPI by market capitalization all experienced gains. Companies such as LG Energy Solution, Samsung SDI, POSCO Future M, SK Innovation, POSCO Holdings, and LG Chem recorded significant increases. Securities stocks like Kiwoom Securities, Mirae Asset Securities, and Korea Financial Group also saw positive growth.
Similar bullish trends were observed in major Asian stock markets, including Japan, China, Taiwan, and Hong Kong.
Turning to the KOSDAQ index, it closed at 839.45, up 7.34%. The index opened strongly at 794.49 and climbed steadily throughout the day, eventually reaching a high of 839.45.
The KOSDAQ index has seen a four-day streak of gains, primarily driven by foreign investors. The rise in market capitalization of top secondary battery stocks has propelled the index to surge by over 7%. This surge triggered a sidecar for the first time in over three years and five months.
Ecopro BM and Ecopro, which rank first and second in terms of market cap, hit the daily limit increase. Other stocks in the green include L&F, Nano New Materials, Yunseong F&C, and Daejoo Electronic Materials. POSCO DX experienced a sharp rise, while pharma/bio-related stocks like Celltrion Healthcare also saw positive gains.
Foreign investors bought a net total of KRW 470.2 billion, while individuals and institutions sold a net KRW 487.3 billion and KRW 6.8 billion, respectively.
In summary, the KOSPI and KOSDAQ indices had a bullish trading day, driven by expectations of a pause in Fed interest rate hikes and positive stock performance in both domestic and international markets.
A panoramic view of the Korea Exchange in Yeouido, Seoul. Photo = Korean Exchange
[인포스탁데일리=윤서연 기자]
■ KOSPI index
The KOSPI index closed at 2,502.37, up 5.66%.
Last weekend, the New York stock market rose on expectations of the end of Fed interest rate hikes amid a slowdown in employment in October, and stock markets in major European countries closed mixed.
On this day, the KOSPI index started strongly at 2,399.80. After hitting an intraday low of 2,395.03 in the early minutes, the advance widened over time. In the afternoon, it moved around the 2,460 line and increased further, eventually closing trading at 2,502.37, the intraday high.
The KOSPI index rose for four consecutive trading days due to simultaneous net purchases by foreigners and institutions. Thanks to the financial authorities’ ban on short selling, the KOSPI index increased by more than 5%. In addition, expectations for the end of Fed interest rate hikes amid the slowdown in US employment in October also improved investor sentiment.
On the 5th, the Financial Services Commission and the Financial Supervisory Service held a temporary meeting of the Financial Services Commission and it was decided to completely ban short selling of all stocks in the domestic stock market between November 6 and the end of June next year . The ban on short selling, which was limited to stocks included in the KOSPI 200 and KOSDAQ 150, was expanded to all stocks on the KOSPI, KOSDAQ, and KONEX.
In this regard, the financial authorities recently explained the expansion of uncertainty in our economy due to the persistent high interest rate environment, the slowdown of global economic growth, and geopolitical risks such as the armed conflict between Israel and Hamas as the main reasons for the total ban . on a short sale.
US non-farm payrolls in October, published last weekend, increased by 150,000. This is lower than the WSJ market estimate of a gain of 170,000 people, significantly lower than the previous month’s gain of 297,000 people, and lower than the average monthly employment gain of 258,000 over the previous 12 months. US Treasury yields fell last weekend amid a slowdown in US employment. The 2-year government bond rate fell 11.80bp from the previous day to 4.865%, the 10-year bond rate fell 16.50bp to 4.508%, and the 30-year bond rate fell 13.00bp to 4.695%.
LG Energy Solution (+22.76%), Samsung SDI (+11.45%), POSCO Future M (+29.93%), SK Innovation (+13.42%), POSCO Holdings (+19.18%), LG Chem (+10.62%), and so forth. Rechargeable battery group and POSCO stocks rose. Amid the stock market surge, securities stocks such as Kiwoom Securities (+10.02%), Mirae Asset Securities (+8.79%), and Korea Financial Group (+7.93%) also rose.
POSCO (Photo = Infostock Daily DB)
Stock markets in major Asian countries, including Japan, China, Taiwan, and Hong Kong also rose.
According to supply and demand, foreigners and institutions bought a net KRW 711.4 billion and KRW 217.7 billion, respectively, and individuals sold a net KRW 930.7 billion. In the futures market, net foreigners bought 7,427 contracts, and individuals and institutions sold 5,035 contracts and 3,308 contracts, respectively.
The won-dollar exchange rate recorded 1,297.3 won, down 25.1 won from the previous trading day.
The 3-year Treasury bond interest rate fell 7.2bp from the previous day to 3.877%, and the 10-year Treasury bond interest rate fell 4.9bp from the previous day to 4.056%.
3-year government bonds futures closed at 103.06, up 19 ticks from the previous day. Foreigners and banks bought a net 6,632 and 3,744 contracts, respectively, and financial investors sold a net 8,816 contracts. Future 10-year government bonds closed at 107.58, up 38 ticks from the previous day. Net Foreigners bought 1,661 contracts, while financial investment trusts and net investment sold 608 and 432 contracts, respectively.
Most of the KOSPI’s top stocks by market capitalization rose. POSCO Future M (+29.93%), LG Energy Solution (+22.76%), POSCO Holdings (+19.18%), SK Innovation (+13.42%), Samsung SDI (+11.45%), LG Chem (+10.62%), Kakao (+8.23%), KB Financial Group (+5.89%), SK Hynix (+5.72%), Celltrion (+5.34%), Hyundai Mobis (+4.59%), LG Electronics (+3.85%), Samsung BioLogics ( +3.83%) and Shinhan Financial Group (+3.44%) rose. On the other hand, Samsung Life Insurance (-1.29%) and others fell.
By industry, every industry rose. Steel/Metal (+12.63%), Chemicals (+8.16%), Electrical/Electronics (+6.56%), Manufacturing (+6.35%), Transport Warehouse (+5.82%), Securities (+5.39%), Distribution (+ ) 5.37%), machinery (+5.20%), pharmaceuticals (+4.84%), finance (+4.18%), medical precision (+4.14%), transportation equipment (+3.55%), services (+3.54%), electricity and gas (+3.38%), textiles/clothing (+3.30%), construction (+2.54%), and food and beverage (+2.41%) recorded the highest rates of increase.
■ KOSDAQ index
The KOSDAQ index closed at 839.45, up 7.34%.
On this day, the KOSDAQ index started strongly at 794.49. After hitting an intraday low of 793.72 in the early minutes, the gains widened over time. It continued to rise sharply in the afternoon, and eventually closed trading at 839.45, the high of the day.
The KOSDAQ index rose for four consecutive trading days due to net buying by foreigners on the first day of the total ban on short selling. The top secondary battery stocks rose by market cap, leading the index to rise. The KOSDAQ index rose more than 7% that day, triggering a sidecar for the first time in about 3 years and 5 months. The daily increase in KOSDAQ was the highest in about 3 years and 8 months since March 2020 (+8.26%).
Ecopro BM (+30.00%) and Ecopro (+29.98%), ranked 1st and 2nd in market cap, rose to the highest limit, L&F (+25.30%), Nano New Materials (+13.16%), Yunseong F&C (+18.80 %), and Daejoo Electronic Materials (+16.69%) etc. have also soared. POSCO DX (+27.00%) rose sharply amid the rise in POSCO Group stocks. HLB (+14.38%), Celltrion Healthcare (+5.95%), pharma/bio, Rainbow Robotics (+14.36%), SP Systems (+7.59%), robots, HPSP (+7.56%), ISC (+10.11%) ), EO Technics (+6.97%), and other semiconductor-related stocks also rose.
Photo = Ecopro
According to supply and demand, foreigners bought a net KRW 470.2 billion, while individuals and institutions sold a net KRW 487.3 billion and KRW 6.8 billion, respectively.
Most of the highest KOSDAQ market capitalization stocks rose. Ecopro BM (+30.00%), Ecopro (+29.98%), POSCO DX (+27.00%), L&F (+25.30%), HLB (+14.38%), Rainbow Robotics (+14.36%), ISC (+10.11% ) ) ), HPSP (+7.56%), Celltrion Pharmaceutical (+7.50%), Eotechnics (+6.97%), SM (+5.96%), and Celltrion Healthcare (+5.95%) rose. On the other hand, Classys (-1.45%) and others fell.
By industry, most industries rose. Finance (+22.19%), general electrical and electronics (+21.82%), other services (+9.22%), manufacturing (+8.59%), chemicals (+6.98%), machinery/equipment (+6.59%), metal ( + 6.10%), digital content (+4.86%), pharmaceuticals (+4.82%), paper/wood (+4.80%), IT parts (+4.26%), other manufacturing (+4.03%), entertainment culture (+3.77 %) %) ), semiconductors (+3.73%), IT H/W (+3.66%), distribution (+3.46%), and IT S/W and SVC (+3.12%) rose. On the other hand, information tools (0.00%) showed a consistent trend.
Reporter Seoyeon Yoon yoonsy0528@infostock.co.kr
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