Connect with us

Hi, what are you looking for?

Economy

KOSPI Index forms a risky pattern amid Samsung, Hyundai, LG woes

South Korea’s KOSPI index crawled back this week as the political crisis in the country accelerated. The index, which tracks the biggest South Korean companies, rose to KRW 2,450, up by 3.80% from its lowest level this month.

South Korean political crisis

The KOSPI Composite index, which tracks the biggest companies in South Korea, crawled back after falling to a multi-month low of KRW 2,362 last week.

The initial plunge happened after the South Korean president announced a state of emergency and martial law. He then sent the country’s police officers to parliament to prevent legislatures from voting on the issue.

While the martial law lasted for a few hours, it had a big impact on the political and economy. For one, the president survived an impeachment vote and is being investigated by the police. Also, the defense minister has been arrested.

The KOSPI index and the South Korean won have bounced back because the state of emergency did not last long. It also rose as investors anticipated no major impact on South Korean companies from the crisis.

Still, the KOSPI index has continued to underperform other global peers. It has fallen by over 15% from its highest level this year, while other indices are within touching distance from their all-time high.

Samsung, LG, and Hyundai woes persist

The main catalyst for the weakness is Samsung, the biggest company in the country that accounts for over 20% of the GDP. 

Samsung Electronics shares have retreated by almost 40% from the year-to-date high as it continues to lag other firms like AMD and NVIDIA in the semiconductor industry. Some analysts are comparing it to Intel, a company that has become a fallen angel in the crypto industry.

Not all Samsung companies have crashed. For example, Samsung Heavy Industries stock has jumped by 42% this year. Similarly, Samsung Fire Marine, Samsung Card, Samsung Life, and Samsung Biologics have all risen by over 20% this year. 

Other parts of the company’s business like Samsung REIT, Engineering, SDI, Pharmaceuticals, and Publishing have all dropped by over 20% this year. 

Companies in the LG Group have also not done well this year. LG Electronics stock has dropped by 14%, while Chemicals, Display, Innotek, and HelloVision have all dropped by over 20% this year. 

The same trend has happened in Hyundai, another company that forms a backbone of the South Korean economy. Some firms in the group like Hyundai Elevator, Marine Engineering, HCN, Heavy and Industries, and Green Food have risen by double digits this year. Hyundai Electric & Energies shares have risen by over 347%.

Other names in the Hyundai family like Motor, Cement, Pharmaceuticals, Motor Securities, and Mar&Fi have risen by double digits. 

KOSPI Index analysis

KOSPI Composite chart by TradingView

The daily chart shows that the KOSPI Composite index has been under pressure in the past few weeks. It peaked at KRW 2,892 in July and has now dropped to KRW 2,452. 

The index formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. Also, the MACD indicator has remained below the zero line, while the Relative Strength Index (RSI) has moved below the neutral level. 

The index has also formed an ascending broadening wedge, a popular bearish sign. Therefore, it will likely have a bearish breakout as sellers target the next key support level at KRW 2,300. 

The alternative scenario is where the KOSPI index recovers, flips the moving averages, and rises to the upper side of the channel at KRW 2,892. That price action would imply a near 20% rally from the current level.

The post KOSPI Index forms a risky pattern amid Samsung, Hyundai, LG woes appeared first on Invezz

You May Also Like

Latest News

LONDON (Reuters) – Demand for London’s most expensive homes cooled last month as high earners worried about the possibility of tax increases by Britain’s...

Latest News

Investing.com — The idea of a U.S. Sovereign Wealth Fund has been gaining attention, with both former President Donald Trump and current President Joe...

Latest News

(Reuters) – Bank of Canada Governor Tiff Macklem opened the door to increasing the pace of interest rate cuts, the Financial Times reported on...

Editor's Pick

Venezuela, a country blessed with natural wealth and stunning landscapes, faces a tourism paradox. Despite its abundant resources, the nation struggles to attract international...

Disclaimer: Bullsmarketdominators.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


Copyright © 2024 Bullsmarketdominators.com