Overnight, after the tax cut bill promoted by U.S. President Donald Trump and the Republican Party passed in the House of Representatives, the domestic stock market closed with a slight decline. The sharp rise in U.S. Government Bonds yields, identified as a cause of global financial market instability, showed signs of calming down after the bill's passage.
On the 23rd, the KOSPI index closed at 2,592.09, down 1.58 points (0.06%) from the previous trading day. The index started at 2,603.57, up 9.90 points (0.38%) from the previous day but reduced its gains during the session, fluctuating around the 2,590 level before turning to weakness at the end of the trading day.
The pattern of individual investors wrestling with foreign and institutional investors unfolded. On that day, foreign and institutional investors sold a net 56.8 billion won and 103.9 billion won, respectively. In contrast, individual investors purchased a net 133.9 billion won, supporting the downside. In the KOSPI 200 futures market, foreign investors showed a buying advantage of 379.8 billion won.
The Inflation Reduction Act (IRA) and changes in nuclear industry policies included in the U.S. tax cut plan separated the fortunes of related sectors. As the IRA subsidies focused on reducing clean energy tax credits, companies in the secondary battery sector, such as LG Energy Solution and L&F, experienced sharp declines. Renewable energy-related stocks, including Hanwha Solutions, CS WIND, and OCI Holdings, also showed weakness.
In contrast, the maintenance of tax credits for the nuclear power business in the revised Inflation Reduction Act proposal, along with reports that President Trump will soon sign an executive order to promote the nuclear industry, led to increases in Doosan Enerbility, KEPCO KPS, and KEPCO E&C. Expectations of participation in nuclear power plant construction boosted stocks in the construction sector, including Hyundai E&C, DL E&C, and GS Engineering and Construction.
President Trump's tax cut plan includes reducing the top personal income tax rate and corporate tax rate, as well as extending the deadlines for tax credits. If the bill is implemented, the federal deficit is expected to increase by $3.8 trillion over the next 10 years. This had previously stirred up financial market instability due to Moody's downgrade of the U.S. national credit rating, which expressed concerns over the U.S. deficit. However, the market interpreted that uncertainty was resolved following the House's passage of the bill. Consequently, the yield on 10-year U.S. Government Bonds fell from 4.62% to 4.53%, while the yield on 30-year bonds dropped from 5.15% to 5.04%.
Lee Kyung-min, a researcher at DAISHIN SECURITIES, noted, "With the passage of President Trump's tax cut plan in the U.S. House, it impacted the domestic stock market. Although the rising bond yields, which could expand the U.S. deficit, have declined somewhat due to the resolution of uncertainty, they have not completely quelled nervous sentiment, leading to intensified selling by foreign and institutional investors."
He said, "Meanwhile, due to the strengthening of the Korean won, the won-dollar exchange rate fell to the low 1,370 won range, prompting foreign investors to respond with purchases in the futures market." In the Seoul foreign exchange market on that day, the weekly closing price for the won against the U.S. dollar (as of 3:30 p.m.) recorded 1,375.6 won, down 5.7 won from the previous day.
The KOSDAQ index closed at 715.98, down 1.69 points (0.24%) compared to the previous trading day. The index started at 720.50, up 2.83 points (0.39%) from the previous day but turned to weakness shortly thereafter. In the KOSDAQ market, foreign investors sold a net 28.6 billion won, while individual and institutional investors bought a net 40.7 billion won and 23.8 billion won, respectively.
In the KOSDAQ market, EcoPro BM and Ecopro saw significant declines among secondary battery-related stocks. Alteogen, LigaChem Biosciences, and ABL Bio closed slightly lower. Meanwhile, quantum computer stocks surged in the New York stock market, resulting in sharply rising shares of KOREA ADVANCED MATERIALS, AXGATE, and Dream Security.