KOSPI crashes 30%, eyes 6,000 mark

The KOSPI, which was once anticipated to reach 10,000, has taken a downturn with predictions of a potential bottom at 6,000. In the last month, the KOSPI has dropped by nearly 30%, marking the most significant decline among major global indices.

Amid this shift, there are growing sentiments among investors that "FOMO" has transformed into "JOMO." FOMO, or Fear of Missing Out, refers to the anxiety of missing out on an upward trend. In contrast, JOMO, or Joy of Missing Out, represents the satisfaction of avoiding a downward trend. Online discussions reflect this change, with comments like “I didn’t buy it” evolving into “I’m glad I didn’t buy it.”

KOSPI Records Largest Decline Among Major Countries

The KOSPI fell by 28% from the 19th to the 20th of last month, recording the lowest return rate among 46 major countries, including G20 and OECD members. After reaching an all-time high of 9,114.55 on the 22nd of last month, it has continued to decline without showing any signs of recovery.

During the same period, the U.S. S&P 500 Index only dropped by 0.6%. While other major Asian stock markets, such as Taiwan’s Taiex (-8.2%), Japan’s Nikkei 225 (-10%), and China’s Shanghai Composite (-8%), also showed weakness, none experienced a decline as severe as the KOSPI.

Analysts suggest that the sharp upward movement of the KOSPI in the first half of the year led to significant profit-taking. Additionally, concerns over a slowdown in global AI investment have placed pressure on the South Korean stock market, which is heavily reliant on semiconductor stocks. There are also interpretations that the volatility caused by single-stock leveraged products has further worsened the decline.

Reuters noted, “The large-scale selling in the South Korean stock market, accompanied by historically high volatility, appears to reflect the increasing proportion of domestic individual investors utilizing high-risk leverage.”

KOSPI Forecasted to Reach 6,000 Amid L-Shaped Trend

In the securities industry, there are forecasts that the KOSPI will continue to exhibit an “L-shaped” trend within a box range for the time being, potentially falling as low as 6,000.

Kim Byung-yeon, an investment strategist at NH Investment & Securities, stated, “Concerns over semiconductor peak-out, AI models from China (Kimi K3), and geopolitical tensions between the U.S. and Iran have converged.” He added, “Under the current circumstances, a leading price-to-book ratio (PBR) of 1.3 to 1.4 times is an appropriate lower bound (rock bottom), which translates to 6,000 points for the KOSPI.” He further noted, “Even if it rises, investors who are stuck at high prices may trigger profit-taking once it surpasses the mid-8,000 level.”

Kim Joon-young, a researcher at iM Securities, predicted, “In a situation where margin balances are accumulating, high volatility is expected to further amplify market fluctuations.” He added, “It is likely that the period of testing whether the index can break through the 10,000-point level while fluctuating within a box range will continue until the end of the year.”

Need for an Investment Approach Without Excessive Reactions

Originally, JOMO is used in the U.S. with a positive meaning of reducing social comparison and increasing life satisfaction. However, in South Korean online investment communities, it is used in mocking reactions such as “Those who didn’t buy are the winners” and “Cash is the best investment.” Investors who could only watch from the sidelines during the bull market are now heaving sighs of relief after avoiding the downturn.

It is only natural to feel happy when stock prices rise and unhappy when they fall. However, experts advise maintaining an investment approach that looks further ahead and invests for the long term. They recommend sticking to the principle of investing long-term in companies that one thoroughly understands, rather than chasing after rapidly rising stocks.

As a starting point to resolve the vicious cycle, earnings are considered the top priority. It is necessary to pay attention to the big tech earnings being released consecutively this week. Immediately, Alphabet and Intel will disclose their earnings after market close on the 22nd and 23rd local time, respectively.

월 5900원 멤버십, 신문 독자에게는 2900원, 조선멤버십
55000원 상당의 신문-잡지 8종 마음껏 보기, 조선멤버십
현금처럼 쓸 7000포인트 받아 알뜰한 쇼핑, 조선멤버십

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