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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] The South Korean stock market faced heightened uncertainty on December 4, following the sudden announcement of a state of emergency by President Yoon Suk-yeol on the night of December 3. This announcement exacerbated political instability, prompting a wave of foreign selling that drove the KOSPI index down by approximately 1.4%, dipping below the 2460 mark.
The KOSPI index opened at 2450.76, a drop of 1.97% from the previous day's close, and briefly fell by more than 2% to the 2440 range. However, it regained some ground and remained relatively flat in the 2460 range. Despite buying activity from domestic investors, with individuals and institutions purchasing 3.38 trillion KRW and 172 billion KRW, respectively, foreign investors sold off a net 4.07 trillion KRW in South Korean equities.
The foreign investors, who had shown strong buying activity the previous day with a net purchase of 5.645 trillion KRW, quickly reversed their position. They were also net sellers in the KOSPI 200 futures market, with a net sale of 302.7 billion KRW. Analysts pointed out that the increasing political uncertainty could lead to a reinforcement of the "Korea discount," where South Korean stocks are undervalued compared to global equities.
Vishnu Varathan, Head of Asia Macro Research at Mizuho Securities, commented, "The martial law declaration has added a political risk premium to South Korean assets, and the fundamental recovery appears difficult." He noted that this political risk premium is unlikely to dissipate soon.
Notably, major stocks like Samsung Electronics (-0.93%), LG Energy Solution (-2.02%), Hyundai Motor (-2.56%), and Celltrion (-2.09%) saw declines. Financial stocks, which had been drawing foreign interest recently, also struggled, with KB Financial (-5.73%), Shinhan Financial Group (-6.56%), and Meritz Financial Group (-1.80%) all falling.
The sectors saw widespread declines, with only food & beverages (up 0.32%) and steel & metals (up 3.07%) showing positive movement. The electricity & gas sector plummeted by 9.94% due to concerns over falling prospects for the East Sea gas field development, while construction (-4.53%), retail (-3.14%), and medical precision industries (-3.56%) also experienced weakness.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
