Anticipation of inflow of funds from abolition of foreign investment registration system
Tomorrow’s US FOMC decision, pay attention to Powell’s mouth
Attention is focused on whether the U.S. Consumer Price Index (CPI) will have a positive impact on the domestic stock market as it meets market expectations. Attention is being paid to whether foreign supply and demand will flow back into the domestic stock market ahead of the U.S. Federal Reserve’s decision on the base interest rate, which will be announced early on the 14th.
According to the Korea Exchange on the 13th, foreign investors are net selling 46.6 billion won worth of stocks in the morning stock market.
Foreigners are selling large stocks such as semiconductors and secondary batteries. Foreign investors are net selling Samsung Electronics worth 16.2 billion won, including Samsung SDI (16.7 billion won), LG Chem (9.8 billion won), SK Telecom (6 billion won), POSCO Holdings (5.8 billion won), Doosan Robotics (3.2 billion won), and LG Energy. Solutions (2.1 billion won) are being sold.
After the results of the Federal Open Market Committee (FOMC) regular meeting were released last month, U.S. Treasury yields and the won-dollar exchange rate fell, foreigners’ investment sentiment in risky assets improved significantly, and foreigners made net purchases of the domestic stock market for the first time in four months.
Previously, the Federal Reserve froze the base interest rate, which was previously 5.25-5.5%, at the FOMC meeting in November. Additionally, in the international foreign exchange market, the dollar’s weakness was evident, with the U.S. dollar index falling 3.2% last month.
After net purchasing about 4.3354 trillion won in May, foreigners continued to sell 1.0716 trillion won in June, 1.9745 trillion won in July, 934.7 billion won in August, 1.0603 trillion won in September, and 2.94442 trillion won in October. This continued, but last month, after half a year, it turned to a net purchase of 2.9522 trillion won.
In particular, starting on the 14th, the Foreign Investment Registration System, which made the procedures for foreigners to invest in domestic stocks difficult, will be abolished after 31 years. Until now, foreigners had to complete pre-registration with the Financial Supervisory Service to invest in listed securities, but in the future, they will be able to create an account at a securities company and make investments without separate registration. Account information is managed using a corporate identification number (LEI) or individual passport number as an identification method. Foreigners who have already completed foreign investor registration may use the issued investment registration number.
Securities markets believe that the results of the December FOMC meeting held early in the morning on the 14th will have a major impact on foreign supply and demand. If the Federal Reserve freezes interest rates at the last FOMC meeting this year, it will be the third consecutive freeze since last September and November. With the outlook for an interest rate freeze prevailing at this FOMC, attention is being paid to what remarks Federal Reserve Chairman Jerome Powell will make at the press conference. There are observations that if the rate of inflation slowdown is not as fast as expected, the interest rate cut may be delayed.
Lim Jae-gyun, a researcher at KB Securities, said, “We expect the Federal Reserve to take a hawkish stance as it has frozen interest rates and unlike the FOMC in November, long-term interest rates have also fallen significantly.” “I will place more trust in its hawkish stance,” he said.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.