Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
KOSPI took heaviest beating among leading stock indices
Seen above is a dealing room at Hana Bank's headquarters in Seoul, Friday, the last trading day of September, when the benchmark KOSPI ended down 0.71% at 2,155.49. The main bourse declined 10.8 percent last month. Yonhap
By Lee Min-hyung
By Lee Min-hyung
The benchmark Korea Composite Stock Price Index (KOSPI) suffered the biggest decline among major stock indices in September as foreign investors exited en masse, data showed Tuesday.
According to the Korea Exchange, the main stock index declined 10.8 percent last month. Other major stock indices of developed countries _ such as the United States, Japan and Europe _ also extended losses during the same period, but Korean stocks topped the list in terms of the monthly drop.
The Nasdaq fell 10.2 percent and the and Dow Jones dropped 9.3 percent last month, while Japan's Nikkei 225 suffered a loss of 6.2 percent during the same period. China's Shanghai Composite Index also declined 5.04 percent.
Korean stocks took the heaviest beating after foreign investors went on a selling spree triggered by the strengthening dollar amid the U.S. Federal Reserve's hawkish gesture.
The won-dollar exchange rate topped a new high of 1,440 per dollar late last month for the first time in 13 years. The steep depreciation of the local currency against the dollar heightened jitters among foreign investors. Additional data from the exchange operator showed that foreign investors dumped 2.78 trillion won worth of Korean shares last month after going on a buying spree in July and August.
Market analysts said the local stock market might face additional declines in October largely due to a further weakening of investor confidence.
“The stock market unrest was sparked by inflation, an intense level of monetary tightening from central banks across the globe and a slowdown in demand,” Kiwoom Securities analyst Han Ji-young said.
The brokerage expected the KOSPI to fall to as low as to 2,100 points this month.
“The stock market here will face a test period of possibly falling to this year's new low this month amid lingering uncertainties in macroeconomic conditions,” the analyst said.
NH Investment & Securities analyst Kim Young-hwan also remained pessimistic over the KOSPI's short-term rebound.
“The KOSPI will fluctuate within a band of 2,070 and 2,220 points this week,” the analyst said. He picked the global economic slowdown, the Fed's rate hikes and the strengthening dollar as key reasons that will put downward pressure on local stocks.
The main bourse ended with a slight gain of 2.5 percent on Tuesday at 2,209.38 due to buying by foreign and institutional investors.