South Korean Stocks Suffer Over 2% Drop Amid Profit-Taking Before Fed Minutes Release

On Wednesday, South Korea's stock market witnessed a decline exceeding 2%, influenced by investors deciding to realize profits from recent stock advancements. This move came in anticipation of the upcoming release of the Federal Reserve's minutes. In response to the market's downward trend, the Korean won depreciated against the US dollar.

Benchmark Index Experiences Setback

The primary index tracking South Korean stocks, the Korea Composite Stock Price Index, experienced a significant decrease, losing 62.50 points or 2.34% to conclude the day at 2,607.31. This downturn brought an end to the index’s consecutive four-day rise.

Trading activity was observed at a moderate level with around 455.9 million shares traded, amounting to 9.99 trillion won ($7.65 billion). Notably, the number of declining stocks at 610 exceeded that of gaining stocks, which stood at 279.

Involvement of Foreigners and Institutions

Foreign investors and institutional traders were net sellers, offloading shares worth 93.4 billion won and 1.2 trillion won, respectively. Contrastingly, individual investors were net buyers, acquiring stocks valued at 1.3 trillion won.

While the US stock market saw minor gains in the Dow Jones Industrial Average, tech-heavy markets such as the Nasdaq experienced a decline due to adjustments in expectations for the Fed’s rate cuts and a cautious stance preceding employment data release.

Analysts point to the downturn in US tech shares as a contributing factor to South Korea's market performance, with anticipation for the Fed’s minutes inducing further market vigilance.

Larger Companies Face Downturns

On the Seoul stock market, many leading companies ended the trading day with losses. Tech giants, Samsung Electronics and SK hynix, saw their share prices drop by 3.27% and 3.93% respectively. The battery and chemical sectors also felt the impact, with LG Energy Solution and LG Chem recording declines in their stock value.

The automotive industry was not immune to the downward trend, with Hyundai Motor and its affiliate Kia experiencing reductions in their share prices.

The South Korean currency, the won, weakened against the US dollar, closing at 1,304.80 won, marking a dip from the previous session’s close.

Seoul, Stocks, Fed