As institutional investors sold more than 400 billion won (US$356.35 million) worth of local shares on the first trading day of the new year, there is growing concern that the benchmark KOSPI can fall below the 2,000 level again.
Analysts say investors are chilled by the global economic slowdown stemming from the trade dispute between the United States and China and the possibility of an increase in the benchmark interest rate in the United States. Other unfavorable factors are also in play, including a poor performance of listed companies amid a rapid decrease in semiconductor exports.
The KOSPI index started with 2,050.95 on Jan. 2, up 9.91 points, or 0.49 percent, from the last trading day of last year on Dec. 28, but ended 31.04 points, or 1.52 percent, lower at 2,010. This is the lowest figure in two months after 1,996.05 on Oct. 29 when it fell below the 2,000 level based on the closing price.
The secondary KOSDAQ index started with 6.3 points, or 0.93 percent, higher at 681.95 but closed 6.28 points, or 0.93 percent, lower at 669.37.
Individual investors net purchased 307.9 billion won (US$274.3 million) worth of shares on the KOSPI market, while institutional and foreign investors net sold 300.9 billion won (US$268.06 million) and 27.5 billion won (US$24.5 million) respectively, leading the nosedive.
Individuals also net bought 175.4 billion won (US$156.26 million) worth of shares on the KOSDAQ market, while institutions and foreigners net sold 130 billion won (US$115.81 million) and 43.8 billion won (US$39.02 million), respectively.
Samsung Electronics Co., Celltrion Inc., LG Chem Ltd. and Hyundai Motor Co. ranked at the top of the stock list in terms of net sales by institutions and foreigners among the top stocks in terms of market cap.
The corporate operating profit estimates on the KOSPI market is expected to decrease by about 20 percent from 45 trillion won (US$40.09 billion) and Samsung Electronics is forecast to particularly show poor performance.
Major global events scheduled to take place later this month include the trade negotiation between the United States and China, speech of the U.S. Federal Reserve chairman Jerome Powell, Federal Open Market Committee (FOMC) and the U.S. President Donald Trump´s annual State of the Union Message to Congress. Such global events are considered a change that determines the direction of the domestic stock market, along with the earnings results of domestic companies in the fourth quarter.