KOSPI’s longest weekly losing streak since December 2022 — yet the KOSDAQ surged more than 10% over the same stretch
The KOSPI looked set to rebound early today (the 7th), but ultimately gave back all its gains, closing out the week at 6,258.77. That makes seven consecutive weekly declines, the longest losing streak since December 2022. Yet over the very same stretch, the KOSDAQ surged more than 10%, snapping back after five weeks of losses. Here’s a look at why the KOSPI and KOSDAQ have diverged so sharply, and what drove today’s session.
A Rebound That Didn’t Last
The KOSPI opened up a promising 68.69 points (1.09%) at 6,365.07, climbing as high as 6,415.60 early in the session as it attempted to rebound. But foreign selling intensified and the gains evaporated almost instantly, with the index tumbling as low as 6,158.73 intraday amid sharply elevated volatility. Bargain-hunting from individuals and institutions in the afternoon clawed back much of the loss, but the index ultimately closed down 37.61 points (0.60%) at 6,258.77. The KOSDAQ was even more dramatic: it opened higher at 807.62, climbed to 814.80, then plunged to 776.60, before recovering much of that decline late in the session to close down 2.86 points (0.36%) at 798.81. That snapped the KOSDAQ’s five-session winning streak that had run since the 31st of last month.
Seven Straight Weekly Declines, Yet the KOSDAQ Surged More Than 10%
Today marked the KOSPI’s seventh consecutive weekly decline on a weekly basis, its longest losing streak since December 2022. Yet over that same week, the KOSDAQ surged more than 10%, snapping back to gains after five weeks of losses. In other words, as the KOSPI fell roughly 5% for the week, the KOSDAQ moved in the exact opposite direction with double-digit gains. Analysts point to this week’s new single-stock leveraged ETF regulations as a key factor, arguing that capital once concentrated in large-cap semiconductor names has shifted meaningfully toward KOSDAQ sectors like secondary batteries, defense, biotech, and financials.
The Backdrop: Yen Carry Trade Unwind Fears Resurface
Underlying this week’s KOSPI weakness is renewed concern over a yen carry trade unwind. On the 3rd, after the yen fell to its lowest level in 40 years, the Bank of Japan (BOJ) and the US Federal Reserve jointly intervened in currency markets to defend it, the first such joint intervention since the 2011 Great East Japan Earthquake, some 15 years ago. The yen-dollar rate jumped as much as 3.3% intraday as a result (yen strengthening). The concern: as the yen strengthens, capital that had borrowed cheap yen to invest in risk assets, including Korean equities, may be forced to unwind those positions to repay loans. This is exactly what happened in July 2024, when a BOJ rate hike of 0.25 percentage points triggered a yen carry unwind that culminated in a KOSPI circuit breaker on August 5 of that year. That precedent is exactly why markets are now on edge about a similar sequence repeating.
Today’s Flows and the Split Between Stocks
Foreign investors drove today’s decline. They started the session as net buyers before flipping to selling, ultimately net selling 862.4 billion won, while individuals and institutions net bought 266.9 billion won and 578.9 billion won respectively, cushioning the fall. Large-cap names split sharply. Samsung Electronics closed up a modest 0.22%, but SK Hynix fell 4.88%, its second straight day of losses, attributed to a sharp overnight decline in US memory names like SanDisk and Western Digital. Samsung Electro-Mechanics (+3.99%), LG Energy Solution (+4.35%), Samsung Biologics (+2.77%), and KB Financial (+2.5%) all rose, while Hanwha Aerospace jumped 4.08%, reclaiming the 10th spot in market cap from Samsung Life, which fell 4.17%. Notably, despite the index’s decline, 554 of 912 listed companies, 60.7%, actually rose, a sign of just how wide the gap was between the handful of large caps driving the index and everything else.
Investor Takeaways and Expert Views
⚠️ Things Investors Should Watch
- Yen carry unwind risk remains an active, unfolding story: How the yen actually trades in the weeks following the US-Japan joint intervention could keep weighing on Korean markets. Given the precedent from August 2024, this is worth continuing to track closely.
- The index and individual stocks can feel very different: As seen today, an index can decline even as more than 60% of stocks rise. Rather than judging the market solely by the headline index, it’s worth checking the specific sectors and stocks you’re invested in separately.
- Watch whether the KOSPI-to-KOSDAQ flow shift persists: Whether the rotation of capital from semiconductors into KOSDAQ names following the leveraged ETF regulation is temporary or a lasting trend needs more time to confirm.
- Some views hold that seven weeks of decline doesn’t necessarily mean the recovery is over: That said, this is just one perspective among several, and whether an actual rebound materializes will depend on foreign investor flows and next month’s major earnings releases.
📌 What Experts Are Saying
- Han Ji-young, Kiwoom Securities analyst: Assessed that interpreting the KOSPI’s recent weakness as the end of its recovery path is excessive, and that it should instead be viewed as a short-term process of absorbing excess supply.
- Yoo Myung-gan, Mirae Asset Securities analyst: Noted that with individual investor inflows now slowing, foreign flows are once again the key variable determining the index’s direction, and that both the pace of the market’s recovery and sector direction will be confirmed through foreign investor flows. He added that foreign flows are more likely to shift gradually, with selling volumes shrinking over time, rather than flipping immediately to net buying.
Taken together, today’s modest decline reflects a close tug-of-war between foreign selling, set against the backdrop of yen carry unwind concerns, and bargain-hunting from individuals and institutions. The KOSPI’s uncomfortable seven-week losing streak, set against the KOSDAQ’s double-digit gain over the same period, lends support to the idea that risk is concentrated in specific sectors rather than the market as a whole. The direction of the yen and foreign investor flows are likely to be the key variables shaping where this market heads next week.
Sources
- Newspim — “[Market Close] KOSPI’s 7th Straight Weekly Decline… Falls to 6,258.77 on Foreign Selling” (newspim.com)
- EBN News Center — “[EBN Data Center] KOSPI Ends a Choppy Session Slightly Lower… Closes at 6,258” (ebn.co.kr)
- Segye Ilbo — “Foreign Investors Flip Again, Sell 860 Billion Won… KOSPI Falls Below 6,300, Down 0.6%” (segye.com)
- Money Today — “Foreign ‘Sellers’ vs. Individual and Institutional ‘Buyers’… KOSPI Closes Down 0.6%” (mt.co.kr)
- Asia Economy — “[Market Close] KOSPI Closes in the 6,200s on Foreign Selling… KOSDAQ Also Falls” (ajunews.com)
- Ezyeconomy — “KOSPI Retreats Below 6,200 on Foreign Selling… SK Hynix Falls for a Second Day” (ezyeconomy.com)
- NewDaily — “US, Japan Move to Defend the Yen, Reviving Yen Carry Unwind Fears… KOSPI Tumbles Again” (biz.newdaily.co.kr)
- Opinion News — “KOSPI Closes Down 0.6% at 6,258.77 on Foreign Selling… 60% of Listed Companies Rose” (opinionnews.co.kr)