KOSPI Plummets on Global Uncertainties

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August 20, 2021 12:02

The Korea Composite Stock Price Index plummeted on Thursday on overnight declines on Wall Street and other global bourses.

The KOSPI fell 1.9 percent to 3,097.83, the lowest since April 1. U.S. stocks slid overnight as the Federal Reserve hinted at an earlier end to monetary easing.

The tech-heavy Kosdaq also tumbled 2.93 percent to close at 991.15, below 1,000 points for the first time in two months. The won closed down another W8.20 at W1,176.2 against the U.S. dollar.

Investors are panicking because foreigners dumped over W8 trillion worth of Korean stocks last week and another W300 billion worth on Thursday.

An electronic board at KEB Hana Bank headquarters in Seoul shows the Korea Composite Stock Price Index closing at 3,097.83 points on Thursday.

Morgan Stanley in a report titled “Memory — Winter is Coming” last week alarmed shareholders of chipmakers. Samsung Electronics fell 1.1 percent and SK Hynix 1.8 percent.

Many foreign investors are withdrawing to safe-haven assets like the dollar. Seo Jung-hoon at KEB Hana Bank said the won is expected to fall further as daily coronavirus infections hover around 2,000 and the semiconductor bonanza is coming to an end.

There are mounting expectations that the Bank of Korea will raise interest rates next week, but uncertainties in the market could yet hold that off. The BOK faces a dilemma as a hike in interest rates is needed to curb spiraling household debt, but that could weaken the won even further.

Prof. Kim Young-ick at Sogang University said, “Major countries are apparently trying to exit from expansionary fiscal policies to revive the economy amid the coronavirus pandemic, so tapering has begun.”

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