KOSPI falls below 2,300,10-month low

The South Korean stock market tumbled on Thursday, with the KOSPI index falling below 2,300 for the first time in 10 months. The foreign exchange market also saw significant fluctuations, with the USD-KRW exchange rate surging by 10.3 won. This downward trend was primarily driven by the relentless rise in U.S. Treasury bond yields and the underwhelming performance of big tech companies like Google, affecting global markets, including South Korea.

The KOSPI closed at 2,299.08 on the day, a drop of 64.09 points (2.71%) from the previous day. The breach of the 2,300 mark marks the first time since January 6, after a span of 10 months. The magnitude of the decline is the most significant since Sept. 26 last year, when it dropped by 3.02%. The KOSDAQ also experienced a sharp decline, falling by 26.99 points (3.50%) to 743.85. Other Asian indices, including the Japanese Nikkei, also closed lower, with a 2.14% decline. The U.S. NASDAQ index was also bearish on Wednesday (local time), falling by 2.43%.

The primary cause of global financial market concerns is the sharp rise in long-term U.S. Treasury bond yields. On Monday, the U.S. bond yields broke through 5% during trading and retreated to 4.8%, only to rebound to 4.96% on Wednesday. High-interest long-term bonds and the escalating Middle East crisis are undermining investor sentiment.

The lackluster performance of big tech companies such as Google has also impacted. In the U.S. stock market on Wednesday, Alphabet, Google's parent company, saw its stock price plummet by 9.5%, resulting in the evaporation of approximately $160 billion in market capitalization in a single day. This represents the most significant market capitalization decline in Google's history. On the same day, the USD-JPY exchange rate surpassed the 150-yen mark, marking the Japanese yen's lowest value in over a year.

On Thursday, the Bank of Korea announced that the real GDP growth rate for the third quarter of this year increased by 0.6% compared to the previous quarter. Market analysts suggest that achieving this year's growth rate target remains uncertain, as indicated by the government and the Bank of Korea (1.4%).


dhlee@donga.com