South Korean stocks experienced a significant drop of over 2.3 percent on Tuesday. This came after a previous session where the market saw its highest ever daily gains, which were prompted by the country’s reintroduction of a ban on stock short selling. The local currency also fell sharply against the US dollar.
The benchmark Korea Composite Stock Price Index closed at 2,433.96, a decrease of 58.41 points or 2.33 percent. This marked the end of a four-session winning streak.
Trading volume was moderate, with 447.6 million shares worth 11.38 trillion won ($8.6 billion). Losers outnumbered gainers, with 634 to 244.
The previous day, the Kospi had its largest daily gain of 134.03 points, rising by 5.66 percent. This was due to the short selling ban that will be in place until the end of June 2024. The ban was implemented by financial authorities to address concerns about illegal short selling practices causing market volatility.
Analysts attribute the drop in stocks to investors taking profit from the previous day’s gains. They also note that the large gains in the previous session were an unexpected and irregular reaction to the systemic change in the market system.
Blue chip stocks were hit hard, including battery maker LG Energy Solution and chip maker SK hynix. Tech companies, such as LG Electronics and Samsung Electronics, also experienced losses.
Chemical and energy shares, which had strong gains in the previous session, also suffered losses.
The local currency, the won, ended at 1,307.90 won against the US dollar, a decrease from the previous session.
Overall, the market experienced a significant drop after a previous session of record-breaking gains.
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