Stock market posts biggest daily fall this year amid SVB fallout

The Korea Times

The Korea Times

Finance

Sun, October 1, 2023 | 17:10

Markets

Stock market posts biggest daily fall this year amid SVB fallout

Posted : 2023-03-14 16:44

Updated : 2023-03-15 15:27

Employees watch monitors at the dealing room of Hana Bank's headquarters in Seoul, Tuesday afternoon. The KOSPI finished at 2,348.97 at Tuesday's closing amid fallout from the collapse of SVB Silicon Valley Bank (SVB). Yonhap

By Anna J. Park

The main index KOSPI slid to below 2,400 points in Tuesday's session, as foreign investors dumped local stocks on pessimistic outlooks amid concern over the collapse of Silicon Valley Bank (SVB) late last week.

According to the Korea Exchange (KRX), the country's bourse operator KOSPI finished at 2,348.97 points, a 2.56 percent decline from the previous session. It is the biggest daily fall this year so far.

Foreign investors led the plunge during the trading session, net-selling 638 billion won ($486 million) worth of local stocks, while retail investors net-purchased 567 billion won worth of stocks and institutional investors net-bought 22.9 billion won worth of local stocks.

The top 30 market cap companies listed on the main benchmark all logged daily falls during Tuesday's session. Out of the top 30 largest companies, Doosan Enerbility posted the biggest fall of 5.78 percent, followed by LG Electronics losing 4.85 percent and Hana Financial 3.86 percent. Among the top 31st to 60th market cap companies on the KOSPI, only three ― SK Telecom, Kakao Pay and Orion ― posted daily gains on Tuesday's session.

Analysts cited investors' growing concerns over possible bank runs at some banks, following the sudden collapse of SVB.

"SVB's insolvency issue is expected to continuously impact the capital markets for the time being, creating increased volatility in the market," said Kim Ji-san, research head of Kiwoom Securities.

The U.S. government announced a waiver on the $250,000 cap on deposit insurance at SVB, vowing to protect savers' deposits to prevent new bank runs at other institutions. Despite this, investor sentiment has weakened due to increased volatility and concern for negative repercussions.

"Despite the U.S. government's protective emergency measures to secure full access to savers' deposits, the market is concerned over the possibility of a chain bankruptcy in some local banks," Kim said.

The tech-heavy Kosdaq also fell by 3.91 percent, finishing at 758.05 points, the largest daily plunge of the index this year. In the Kosdaq market, both foreign and institutional investors chose to net-sell a total of 506 billion won worth of stocks, while retail investors net-purchased local stocks.

Amid the dumping of local stocks by foreign investors, the won-dollar exchange rose by 9.3 won, ending at 1,311.1 won per dollar at Seoul's foreign exchange market on Tuesday afternoon.

The release of U.S. Consumer Price Index (CPI) data for February, slated to be announced later Tuesday night (Korea time), is also adding pressure on investors' preference for safer assets.

annajpark@koreatimes.co.kr