Seoul Shares Decline as Foreign Investors Sell-Off Amid US Credit Downgrading
Seoul shares experienced a downward trend on Thursday, driven by heavy sell-off activity from foreign investors and institutions following the downgrade of the U.S. credit rating. As a result, the benchmark Korea Composite Stock Price Index (KOSPI) fell by 0.42 percent, or 11.08 points, to reach 2,605.39. The South Korean won also weakened against the U.S. dollar.
The decline in Seoul shares came in the wake of Fitch Ratings downgrading the U.S. credit grade from AAA to AA+ for the first time since 2011, citing concerns over repeated debt limit standoffs and last-minute resolutions. This move led to investors capitalizing on their gains from the past few months and prompted a negative response across all three major U.S. stock indexes.
Despite the credit downgrade, the July U.S. jobs report revealed better-than-anticipated growth in private payrolls. This indicates ongoing resilience in the labor market. However, the KOSPI faced downward pressure from foreign investors selling off spot and futures holdings, as tech shares in the U.S. stock market experienced declines following the credit downgrade.
Foreign investors and institutions sold off shares worth a total of 154.5 billion won and 670.5 billion won, respectively. Conversely, retail investors purchased shares worth 812.2 billion won.
Seoul’s big-cap stocks displayed mixed performance. Samsung Electronics, the market behemoth, recorded a decline of 1.57 percent, while SK hynix, the second-largest chipmaker, gained 0.42 percent. LG Energy Solution, a leading battery manufacturer, experienced a slight dip of 0.18 percent, and its competitor Samsung SDI went down by 1.69 percent. On the other hand, POSCO Future M added 0.51 percent, and steel giant POSCO Holdings increased by 1.2 percent.
The performance of auto shares was also mixed, with Hyundai Motor dropping 0.42 percent and its affiliate Kia gaining 0.88 percent. Hyundai Mobis, the auto parts affiliate of Hyundai Motor, rose by 1.1 percent.
Bio stocks showed bullish momentum, with Samsung Biologics rising by 2.28 percent and Celltrion increasing by 2.16 percent.
Notably, companies related to superconductors witnessed significant growth following a claim by researchers from Seoul-based Quantum Energy Research Centre Inc. that they have developed a room-temperature superconductor. This material has been highly sought after by science and technology experts. Daechang, Seowon, and Dcksung all saw substantial gains of close to 30 percent.
The Korean won ended the day at 1,299.10 won against the U.S. dollar, depreciating by 0.6 won compared to the previous session’s close.
In summary, the decline in Seoul shares was primarily driven by the sell-off activity of foreign investors and institutions, triggered by the downgrading of the U.S. credit rating. However, it is worth noting that some sectors, such as bio stocks and superconductor-related companies, exhibited positive performance amid the broader market uncertainties.
