South Korea’s KOSPI Falls 5.1% as Chip Stocks Retreat
South Korea’s KOSPI fell after chip stocks that had surged previously pulled back. The index closed down 5.1% on Monday at 6,257.45 points. The KOSPI was down more than 5% at one point during Monday’s session. Chipmakers fell sharply, overwhelming support from stronger-than-expected export data. The index was highly volatile in July: Although it surged 18% last Friday, it still fell 22.2% for the month, its biggest monthly decline since October 2008. On the geopolitical front, U.S. President Donald Trump said the United States would temporarily hold off on a new round of strikes against Iran. He said he hoped to reach an agreement quickly to prevent Iran from developing a nuclear program and to reopen the Strait of Hormuz. Data released over the weekend showed that South Korea’s exports rose 62.8% year over year in July, exceeding market expectations. Imports rose 26.5% to $68.56 billion, broadly in line with economists’ forecast for 26.6% growth. According to South Korean media reports, investor deposits—funds held in brokerage accounts for stock purchases and often viewed as a pool of sidelined market money—are also declining rapidly as the KOSPI has swung sharply since July. Investors’ average daily deposits last month plunged by nearly 20 trillion won from the previous month. That level was about 10 trillion won lower than in March this year, when the KOSPI underwent a correction after a military conflict broke out between the United States and Iran. Data released on the 3rd by the Korea Financial Investment Association showed that investor deposits totaled 104.6584 trillion won as of the 30th of the previous month—the day the KOSPI reached a recent low. Compared with the record 139.6948 trillion won reached on June 4, deposits had fallen by more than 35 trillion won in roughly two months. Investor deposits are funds placed in brokerage accounts for stock purchases. A larger pool of deposits can increase the likelihood of greater market liquidity. When deposits decline, the market’s supply-and-demand momentum necessarily weakens.
The KOSPI was down more than 5% at one point during Monday’s session. Chipmakers fell sharply, overwhelming support from stronger-than-expected export data. The index was highly volatile in July: Although it surged 18% last Friday, it still fell 22.2% for the month, its biggest monthly decline since October 2008.
On the geopolitical front, U.S. President Donald Trump said the United States would temporarily hold off on a new round of strikes against Iran. He said he hoped to reach an agreement quickly to prevent Iran from developing a nuclear program and to reopen the Strait of Hormuz.
Data released over the weekend showed that South Korea’s exports rose 62.8% year over year in July, exceeding market expectations. Imports rose 26.5% to $68.56 billion, broadly in line with economists’ forecast for 26.6% growth.
According to South Korean media reports, investor deposits—funds held in brokerage accounts for stock purchases and often viewed as a pool of sidelined market money—are also declining rapidly as the KOSPI has swung sharply since July. Investors’ average daily deposits last month plunged by nearly 20 trillion won from the previous month. That level was about 10 trillion won lower than in March this year, when the KOSPI underwent a correction after a military conflict broke out between the United States and Iran.
Data released on the 3rd by the Korea Financial Investment Association showed that investor deposits totaled 104.6584 trillion won as of the 30th of the previous month—the day the KOSPI reached a recent low. Compared with the record 139.6948 trillion won reached on June 4, deposits had fallen by more than 35 trillion won in roughly two months.
Investor deposits are funds placed in brokerage accounts for stock purchases. A larger pool of deposits can increase the likelihood of greater market liquidity. When deposits decline, the market’s supply-and-demand momentum necessarily weakens.