2024-01-13 00:30:21
On the 12th, KOSPI closed at 2525.05, down 0.6% from the previous day./Newsis
“The US and Japanese stock markets rise every day, but why does Korea’s KOSPI fall every day?” “The President even announced at the New Year’s stock market opening ceremony that he would eliminate the Korea discount, but why are stock prices going backwards?”
As KOSPI fell for eight consecutive trading days in the new year, investors’ dissatisfaction and concerns are growing. On the 12th, KOSPI closed at 2525.05, down 0.6% from the previous day due to foreign and institutional selling. This year, KOSPI only closed higher, up 0.6% on the first day of the new year, but has been closing in negative territory every day since the next day. It has fallen by regarding 5% since the beginning of the year.
According to the Korea Exchange on the 13th, KOSPI’s 8 consecutive trading days of decline is the 3rd highest in history. The longest record in history was in June and September 1989, when KOSPI fell for 10 consecutive trading days as concerns arose regarding a global economic recession.
Graphics = Chosun Design Lab Jeong Daun
On the other hand, the S&P 500 index, which is calculated by combining the stock prices of 500 blue-chip U.S. companies, is nearing an all-time high, exciting investors. The S&P 500 index closed at 4783.83, up 0.1% from the previous day on the 12th (local time), getting close to the all-time high (4796.56) set in January 2022. In the United States, the economy is not slowing down easily, with jobs abounding and consumption not slowing down even in a high interest rate environment.
The Japanese stock market is also continuing its upward rally. The Nikkei Average, Japan’s representative index, has risen continuously since the 5th and has risen more than 6% this year alone. The closing price on the 12th was 35,577.11 yen, rushing toward the all-time high of 38,915 yen in 1989, when the bubble economy was in full swing. As exports increase due to the weak yen and corporate performance improves, the government’s stock market stimulus policies are added, creating a bull market.
This year, the Japanese government revamped the Small Investment Tax Exemption System (NISA), a Korean version of ISA, with the goal of increasing citizens’ assets and launched New NISA. It is an unprecedented product that provides lifetime tax exemption to all citizens over the age of 18 (in Japan, stock profits are taxed at 20%). SMBC Nikkyo Securities predicted that 2 trillion yen (approximately 18 trillion won) per year will be invested into Japanese stocks due to the effect of the new NISA.
➡️If you’re curious regarding Japan’s new tax-saving product, click here on Chosun.com (they say it’s the ‘king of tax savings’… and even a 20-year finance man said ‘I got a headache’).
Graphics = Chosun Design Lab Kwon Hye-in
Unlike the US and Japanese stock markets that are gradually rising, Korea’s KOSPI is having a difficult time with its stamina not holding up. An official in the securities industry said, “At the end of each year, institutions buy stocks to receive dividends, and sell them when the year ends. However, as news of an interest rate cut came out in the U.S. at the end of last year, institutions became desperate and overstocked stocks, and this year they are liquidating them all. “The followingeffects are appearing,” he said.
In other words, as expectations for an interest rate cut grew at the end of last year, the Santa Rally took place in a ‘let’s buy before it’s too late’ atmosphere, but as such expectations receded in the new year, it is pouring cold water on the stock market. Institutions that bought stocks at the end of the year aiming for dividend profits have already sold more than 6 trillion won worth of stocks this year (regarding 2 trillion won of which is from the Samsung family’s block deal).
An official from the investment strategy department of a large management company said, “We are currently in a period where the index, which rose rapidly due to expectations of an interest rate cut at the end of last year, is reversing, but the reason why Korean stock prices are falling more than in the U.S. is largely due to the sluggish performance of the semiconductor industry, which is the support of the Korean economy.” Samsung “It was frankly shocking in Yeouido that the first digit of Electronics’ fourth quarter performance (operating profit) was 2, not 3,” he said.
Graphics = Chosun Design Lab Jeong Daun
Samsung Electronics recently announced that its preliminary operating profit for the fourth quarter was 2.8 trillion won, a 35% decrease from the previous year. This is 25% lower than the securities industry’s expectations (KRW 3.7441 trillion) and is virtually at the level of an ‘earnings shock.’ Samsung Electronics’ operating profit in 2023 was 6.54 trillion won, falling below 10 trillion won for the first time in 15 years since the global financial crisis in 2008.
“Korea is not a country that supports domestic demand like the U.S. or Japan, but only exports, especially semiconductors. If expectations for the industry are broken, the index has no choice but to take a break,” he said. “Still, when you see Nekao (Naver + Kakao) and individual stocks rising, the index “I don’t think I’m just going to look at it,” he said. This means that profit opportunities may come from small and medium-cap stocks, low-priced stocks, and long-term neglected stocks rather than large-cap KOSPI stocks.
Chosun Ilbo, December 12, 1989, front page. To prevent a stock market crash, the Roh Tae-woo government introduced the ‘December 12 Measures’, which allows unlimited purchase of stocks by lending bank money to investment trust companies./Chosun DB
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