Panic Selling Grips Korean Stocks as Kospi Enters Bear Market
South Korea’s Kospi Set for Bear Market Amid Foreign Selling
(Bloomberg) -- South Korea’s stock benchmark, Asia’s worst performer this year, entered a bear market as a selloff in risk assets intensified after the Federal Reserve signaled an interest-rate liftoff in March.
The Kospi Index plunged 3.5%, extending losses from a recent peak in early July to more than 20%. Retail investors, who have been a key source of support for the market amid the pandemic, joined foreigners in dumping shares on Thursday.
Equities in South Korea have been hit particularly hard amid the recent global rout as the nation’s biggest-ever initial public offering sapped liquidity from the secondary market and daily Covid-19 cases hit a record. The Kospi has also suffered due to its large tech exposure, with the sector bearing the brunt of the selloff as bond yields rose. The gauge is now down 12% in 2022.
While the broader market plunged, shares of battery maker LG Energy Solution surged on their debut Thursday. The record IPO raised 12.75 trillion won ($10.7 billion), with shares being sold at the top of an offered range.
“South Korean stock market is falling more than its peers and that is largely due to LG Energy Solution,” said Lee Jaesun, an analyst at Hana Financial Investment Co.
“Historically this kind of bear market was accompanied by weak economic data and corporate earnings,” she said. “This time, it’s about investors fearing high inflationary pressure accelerating the pace of monetary tightening. Energy prices need to be tamed in order for the market to restore calm.”
In large-cap names, Krafton Inc., KakaoBank Corp. and Celltrion Inc. have been among the big losers so far this year as foreign investors sold their shares.
| Read: |
|---|
| Cheap Book Value, Technicals Flag Potential Kospi Rebound: Chart |
| Korea’s Kospi Enters Correction as Foreigner Investors Sell |
| Kakao Shares Extend Rout as Founder Tax Probe Adds Fresh Woes |
©2022 Bloomberg L.P.