![On the afternoon of the 24th, the closing price of KOSPI is displayed on the status board of the dealing room at Hana Bank's headquarters in Jung-gu, Seoul. On this day, KOSPI closed the deal at 2994.98, down 75.11 points from the battlefield. The collapse of the 3000 line is the first since the 29th of last month. [이충우 기자]](https://i0.wp.com/file.mk.co.kr/meet/neds/2021/02/image_readtop_2021_182665_16141635994552730.jpg?w=560&ssl=1)
On the afternoon of the 24th, the closing price of KOSPI is displayed on the status board of the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul. On this day, KOSPI closed the deal at 2994.98, down 75.11 points from the battlefield. The collapse of the 3000 line is the first since the 29th of last month. [이충우 기자]The KOSPI fell below the 3000 line on the 24th without overcoming inflation concerns. After recording 2976.21 on the 29th of last month, the KOSPI surpassed the’Three thousandpi’ (KOSPI 3000) for about a month, but it collapsed on this day. Jerome Powell, chairman of the Federal Reserve (Fed), attended the Senate Financial Committee hearing the day before and said, “It is appropriate to maintain the current stance until the employment target is reached and inflation is on a path to gently exceed 2% over a period of time. “Do”, but did not alleviate market uncertainty. On the 24th, the KOSPI ended with a record of 2994.98, down 2.45% from the previous day.
It was foreign investors who led the KOSPI to plunge on the 24th. On the day, foreigners sold 420 billion won worth of net sales and institutional investors 130 billion won worth of net sales. Individual investors net bought 5614 billion won worth of foreigners and institutions against the’twin sale’, but it was not enough.
On this day, a number of foreign funds purchased SK Biopharm worth KRW 1,1162 trillion, and it was counted as a net purchase of KRW 6366 billion, but because it was an after-hours transaction, it was not able to prevent the KOSPI plunge. The KOSDAQ index fell even steeper to 906.31, down 3.23% from the previous day. The KOSDAQ index dropped to the front of the 900 line that day, raising concerns.
Kim Yong-gu, a researcher at Samsung Securities, said, “A remark by Chairman Powell to dispel concerns about an interest rate hike has not been resolved in the market since March of this year,” he said. “Last March, the economy contracted sharply due to the corona 19 pandemic. As much as it did, in March this year, it will create an optical illusion as if the price index rises rapidly due to the base effect.”
The rise in debt levels as the KOSPI rose last month is also a burden. According to the Financial Investment Association, securities firms’ credit loan balance has recently exceeded 22 trillion won, the highest in history. At the end of last year, it was about 19 trillion won. Investor deposits, representing stock market funds, soared to 74 trillion won last month, but recently decreased to 65 trillion won.
If the market interest rate rises, investors’ interest repayment burden will rise, and fears that the stock market may plunge in the short term can also be a bad thing. According to the Financial Investment Association, the 3-year Treasury Bond interest rate, which is mainly used as the market rate, recorded 1.006% on the day. The 3-year Treasury Bond interest rate is a short-term interest rate and is strongly linked to the base rate, but has exceeded 1% since the 22nd due to strong inflation pressure. Considering that the 3-year Treasury Bond yield fell to 0.8% last year, it is interpreted that the interest rate has entered a clear upward trend.
Some analysts also analyzed that Hong Kong’s review of an increase in stamp duty on securities transactions had a negative impact on Asian stocks. Researcher Kim explained, “In a situation where the sense of vigilance was extremely high, individual news such as review of a stamp duty increase in Hong Kong would have been reflected as a factor in the stock market decline.” KB Securities researcher Ha In-hwan said, “The reason for the sharp decline in the stock market was due to the announcement of a stamp duty increase by the Hong Kong government and real estate regulations in China.” “The market is wary of the rise in mortgage rates by Chinese banks due to the rise in real estate prices in China. “I said.
Researcher Ha added, “Hong Kong is small enough to shake the entire global stock market, but the reason the market is surprised is because of concerns about the possibility of a tax issue in earnest.” However, it is expected that the stock market will not trend downward due to the Hong Kong government’s stamp duty increase.
However, as domestic companies’ earnings are on a recovery trend, some are looking to come up with a rosy outlook in the mid to long term. “The central bank can control short-term interest rates, and long-term interest rates are moving according to market participant judgment, but long-term interest rates are rising rapidly,” said Kim Hak-gyun, head of Research Center Shinyoung Securities. Asian stock markets seem to have fallen all at once as expectations have risen and long-term interest rates have risen a lot. The Fed does not seem to have any intention of actively responding to the recent rise in long-term interest rates,” he said.
However, Center Director Kim pointed out, “I don’t think the recent inflation and interest rate rises are essentially the factors that change the attitude of the central banks including the Fed.” Researcher Kim diagnosed, “The performance fundamentals are still positive. Currently, it should be viewed as a process for the KOSPI to settle at the 3000 line.”
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