South Korean stock market plunges to one-year low

South Korean stock market plunges to one-year low

South Korean stock market plunges to one-year low

South Korean stock market shares fell just over two percent on Monday, reaching a year-long low, Yonhap News Agency reported, noting that the development came amid heightened concerns among Asian investors that a global economic recession may be on the way. coming.

“The benchmark Korea Composite Stock Price Index (KOSPI) fell 49.9 points, or 2.04 percent, to close at a new 19-month low of 2,391.03 points. The index plunged to an intraday low of 2,372.35 points,” Seoul-based Yonhap reported on June 20.

Further details on South Korea’s stock market activity on Monday, Yonhap wrote:

Trading volume was mediocre with about 583 million shares worth about 9 trillion won ($7 billion), with losers numbering more than 585 to 62.

Foreigners netted 662 billion won while institutions bought 446 billion won and private investors bought 183 billion won.

After a weak start, the KOSPI continued to lose ground, led by chipmakers and other heavyweights in the market.

Shares of Seoul fell on Monday “as investors were gripped by fears that a recession could hit the global economy amid faster-than-expected monetary tightening in major economies,” Yonhap noted.

“The (hawkish) stance of the Fed has kept general investor sentiment weak,” South Korean financial analyst Park Gwang-nam of Mirae Asset Securities told the news agency on June 20.

The Associated Press

A currency trader walks past screens showing the Korea Composite Stock Price Index (KOSPI) at a currency trading room in Seoul, South Korea, Friday, June 3, 2022. (AP Photo/Lee ​​Jin-man)

Park and Yonhap referred to the US Federal Reserve’s June 15 decision to raise interest rates by three-quarters of a percentage point in an attempt to curb record inflation. The move marked the largest rate hike by the US Federal Reserve since 1994, although it was “widely anticipated by investors,” according to Reuters.

“To put an end to weeks of speculation, the rate-setting Federal Open Market Committee pushed the level of its benchmark fund rate to a range of 1.5%-1.75%, the highest since just before the Covid crisis. [Chinese coronavirus] pandemic began in March 2020,” CNBC reported on June 16.

Shares were volatile after the decision, but moved higher when Fed Chair Jerome Powell spoke at his post-meeting press conference.

“Clearly, today’s 75 basis point increase is an unusually large one, and I don’t expect moves of this magnitude to be common,” Powell, chairman of the US Federal Reserve, said on June 15.

“However, he added that he would like the July [U.S. Federal Reserve] meeting to see a 50 or 75 basis point increase. He said decisions will be made “meeting by meeting” and the Fed will “continue to communicate our intentions as clearly as possible,” CNBC said of Powell’s comments.

The South Korean stock market’s immediate reaction to the US Federal Reserve’s June 15 spike was almost the exact opposite of its activity on June 20.

South Korean stocks rose more than 2% on Thursday [June 16] understanding [a] seven-day losing streak after the US central bank rolled out a 75 basis point rate hike as expected. The Korean won while benchmark bond yields fell,” Reuters reported.

South Korea’s domestic currency, the Korean won, closed at 1,292.4 won against the US dollar on June 20. The dip marked a 5.1 Korean won drop from the close of the previous session, according to Yonhap.