On the last day of August 2021, South Korea's stock market rose sharply, lifting the KOSPI to 3,199.27 on a wave of technology buying and heavy foreign investment. The gain offered a brief lift after a difficult stretch, though it was not enough to turn the month positive. It is one more moment in the long dance between a nation's export-driven companies and the shifting moods of global capital, where a rally can bring relief without yet bringing certainty about what comes next.
South Korean Stocks Post Biggest Jump in Over Five Months on Tech Rally and Foreign Buying
A three-day run that still left the month slightly in the red
Mark
Biggest jump in five months sounds dramatic. How big a deal is 1.75%?
Mimi
It's the largest daily gain since March 11, and it made it three up days in a row. The index closed at 3,199.27, so it was a solid move rather than a historic one.
Luke
And the month still ended down 0.10%. The rally only narrowed the damage after July's 2.86% drop.
Mark
What drove it?
Mimi
Tech, mainly. Samsung Electronics rose 2.82% and SK Hynix 2.90%, while Naver and Kakao each gained more than 2%. Foreigners bought a net 1,161.7 billion won.
Luke
Worth noting the report records that buying but doesn't say why foreigners bought. Any explanation of motive would be guesswork.
Mark
The won rose too, but fell for the month?
Mimi
Yes. It gained 0.65% on the day to 1,159.5 per dollar, but it's down 0.79% for August, a third straight monthly decline.
Luke
Also the budget: 604.4 trillion won with debt at 50.2% of GDP. The report presents it as a same-day event, not as a cause of the market move.
Mark
What's next?
Mimi
U.S. payroll data, because of Fed tapering timing, and Korean trade data on Wednesday.
Luke
Whether the rally holds is unknown. One strong day doesn't establish a trend.
El Pulso
- The KOSPI jumped 1.75% to 3,199.27, its sharpest gain since March, yet August still ended slightly lower.
- Foreign investors poured in roughly 1.16 trillion won, pushing chip giants Samsung and SK Hynix to the front of the rally.
- The won strengthened 0.65% against the dollar, but it still slipped for a third straight month, keeping currency worries alive.
- Markets are holding their breath for U.S. payroll figures and signals on when the Federal Reserve will begin tapering stimulus.
- Seoul's record 604.4 trillion won budget, with debt climbing toward 50.2% of GDP, adds a fiscal question to the mix.
On the last day of August 2021, South Korea's stock market rose sharply, lifting the KOSPI to 3,199.27 on a wave of technology buying and heavy foreign investment. The gain offered a brief lift after a difficult stretch, though it was not enough to turn the month positive. It is one more moment in the long dance between a nation's export-driven companies and the shifting moods of global capital, where a rally can bring relief without yet bringing certainty about what comes next.
South Korean stocks closed Tuesday, August 31, with their strongest single-day gain in more than five months. The KOSPI rose 1.75% to 3,199.27, its third straight session of gains, and the move was carried by technology. Samsung Electronics and SK Hynix led the climb, while internet names Naver and Kakao also advanced.
Foreign investors did much of the buying, adding roughly 1.16 trillion won in shares on the main board. Even so, the rally could not rescue the month. The KOSPI finished August down 0.10%, following a steeper fall in July, so the three-day run stopped just short of a positive month.
The won gained alongside stocks, closing at 1,159.5 per dollar, up 0.65% on the day. It still declined over the month, extending a third straight monthly loss. Bond yields eased slightly, with the three-year treasury yield dropping to 1.393%.
The government unveiled a record 604.4 trillion won budget for next year, with debt projected to reach 50.2% of GDP. Attention now turns to U.S. payroll data and the timing of Federal Reserve stimulus tapering, as well as South Korea's trade figures due Wednesday.
South Korean stocks closed Tuesday, August 31, with their strongest single-day gain in more than five months. The benchmark KOSPI finished up 55.08 points, or 1.75%, at 3,199.27. It was the index's third consecutive session of gains.
The move was led by technology shares. Samsung Electronics rose 2.82% and chipmaker SK Hynix gained 2.90%. Two of the country's big internet names also climbed: Naver added 2.57%, and Kakao, which operates a mobile messaging app, rose 2.31%.
Foreign investors drove much of the buying. They were net buyers of 1,161.7 billion won, about $1.00 billion, of shares on the main board. Reuters noted that the day's gain was the sharpest since March 11.
The rally did not rescue the month. For August as a whole, the KOSPI slid 0.10%, a small decline that follows a 2.86% fall in July. So the three-day run brought the index to the brink of a flat month rather than a positive one.
The won strengthened alongside equities. It ended at 1,159.5 per dollar on the onshore settlement platform, 0.65% higher than Monday's close of 1,167.0. In offshore trading it was quoted at 1,159.1, and the one-month non-deliverable forward contract was quoted at 1,159.3. Even so, the currency fell 0.79% over the month, its third straight monthly decline.
In the bond market, September futures on three-year treasury bonds rose 0.02 points to 110.54. The yield on the most liquid three-year Korean treasury bond fell 0.5 basis points to 1.393%.
The government also made news on Tuesday by unveiling a record 604.4 trillion won budget plan, about $518.54 billion, for next year. Under the plan, the debt-to-GDP ratio would reach 50.2%, the highest on record.
Looking ahead, investors are closely watching U.S. payroll data because of what it may signal about when the Federal Reserve begins tapering its pandemic-era stimulus. South Korea's trade data is due on Wednesday.
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Economy & Finance