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| An employee at the headquarters of Hana Bank passes by a monitor in the bank's dealing room showing Tuesday's closing price, as the KOSPI hit a year-low at closing. Yonhap |
By Anna J. Park
Korea's benchmark KOSPI plunged over the market's Omicron variant fears on Tuesday, dropping to the lowest point logged this year. The index closed at 2,839.01, a 2.42 percent fall from the previous trading day. Tuesday's closing is also the lowest level since last Dec. 29, when the index finished at 2,820.51 points.
The market started off with a rather optimistic atmosphere, with a nearly 1 percent increase from the previous day, as the index recorded as high as 2,942.93 points at 9:06 a.m., a more than 30-point increase from Monday's closing index points.
Yet, the index continued to drop during the trading session, with the fall accelerating starting around 2 p.m., when news of the Moderna chief's comment that existing vaccines would struggle with the Omicron variant hit local news stands. The KOSPI hit as low as 2,822.73 at 3:18 p.m., which is the lowest intra-trading point since last Dec. 29.
The tech-heavy KOSDAQ also fell by 2.69 percent on Tuesday, finishing at 965.63 points at closing.
Analysts say the Omicron-led uncertainty in the global economy, which is the main cause of Tuesday's fall, is expected to linger, until more reliable and specific information about Omicron is revealed, alleviating investor sentiment. U.S. Federal Reserve Chair Jerome Powell's testimony to Senate lawmakers that the Omicron variant could pose increased uncertainty for inflation also negatively impacted the Korean stock market in the afternoon.
"For an economy like Korea's that has a relatively weak domestic demand, the impact from Omicron is more likely to cause a delay in economic recovery," said Huh Jae-whan, senior analyst at Eugene Investment & Securities. "The Omicron variant is forecast to deepen already-existing gaps among industries and countries, rather than to impart a global shock."
Foreign investors and institutional investors each net-sold 139.4 billion won ($117 million) and 636.6 billion won worth of local stocks on the KOSPI market, Tuesday, while retail investors net-purchased 739.8 billion won of stocks on Tuesday.
"The fall of U.S. stock futures during after-hours trading, as well as the 1.9 percent decline in Korea's industrial output in October have also contributed to foreign investors' net-selling on Tuesday," explained Kim Seok-hwan, a senior analyst at Mirae Asset Securities.
