Concerns about an economic recession are growing following the announcement of universal and reciprocal tariffs by the Donald Trump administration, causing the domestic stock market to show weakness on the morning of the 7th.
The KOSPI index reached 2362.05 at 11:21 a.m. on that day, declining 103.37 points (4.19%) from the previous trading day. The KOSDAQ index recorded a decrease of 23.63 points (3.44%) to 663.76. Both the KOSPI and KOSDAQ indices plummeted as soon as the market opened.
The KOSPI 200 futures dropped by more than 5%, triggering the first sidecar of the year. A sidecar is a system that limits the effectiveness of bid orders for program trading for five minutes when the KOSPI 200 futures for the nearby month decline by more than 5% within one minute.
Not only the Korean stock market but also all Asian stock markets are faltering. The Hang Seng Index in Hong Kong recorded a decline of over 9% as soon as the market opened. The Taiwan Weighted Index also fell by nearly 10%. The Shanghai Composite Index in China and the Nikkei 225 Average in Japan are experiencing declines of around 5%.
Foreign investors have been pouring out net sales in the trillion won range since the 3rd. In the KOSPI market, foreign investors and institutions are currently showing sales dominance at 1.0635 trillion won and 218.5 billion won, respectively. At the same time, foreign investors also placed sell orders of about 97 billion won in KOSPI 200 futures. In the KOSDAQ market, individual investors are net buying 135.9 billion won, while foreign investors and institutions are net selling 139.9 billion won and 5.1 billion won, respectively.
As selling continues, there are few stocks on the market that are rising. In the KOSPI market, the prices of 857 stocks are falling, while only 76 stocks are showing an upward trend. In the KOSDAQ market, 1486 stocks are in a downtrend, with only 205 stocks in an uptrend.
Even when narrowing down to the top 10 stocks by market capitalization in the KOSPI market, all stocks are experiencing price declines. Stocks of Samsung Electronics, SK hynix, LG Energy Solution, Samsung Biologics, Hyundai Motor, Celltrion, and Kia are all being traded at prices lower than the previous trading day.
The same applies to the top stocks by market capitalization in the KOSDAQ market. Stocks of Alteogen, Ecopro BM, HLB, Ecopro, Rainbow Robotics, and Sam Chun Dang Pharm have all fallen.
Although the domestic stock market is at a low point in terms of valuation, many believe it is too early to start buying on the cheap. The Trump administration plans to enforce universal and reciprocal tariffs, while China and the European Union (EU) have stated intentions to impose retaliatory tariffs.
KB Securities Research Institute analyst Lee Eun-taek presented a lower bound of 2300 for the KOSPI index based on a 12-month forward price-earnings ratio (PER) of 8.1 times. He noted, “Despite a trend of profit upgrades in the semiconductor sector leading to a gradual rebound in the 12-month forward earnings per share (EPS) for the KOSPI index, we must keep in mind the possibility of increased volatility.”