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With South Korea entering the fourth wave of the COVID-19 pandemic, the benchmark Korean stock price index (KOSPI) has fallen more than 1%. The won in local currency has risen by more than 19 won in the past three days to reach 1,150 against the US dollar. The market appears to have been affected by fears that Level 4 social distancing rules in the Seoul metropolitan area could harm consumption.

KOSPI lost 34.73 points, or 1.07%, to close at 3,217.95 on Friday. KOSPI fell nearly 2% at one point to cross the 3,200 mark. Foreign investors and institutional investors sold 1.3337 billion won and 508.5 billion won, respectively. The net amount sold by foreign investors was the largest since May 13 (1.4343 billion won). Individual investors net bought 1.8014 trillion won, preventing further declines. It was the third day in a row that individual investors net bought more than 1,000 billion won. As foreigners continued to sell shares, the won rose 4.1 won from the previous day (1,145.0 won) to close at 1,149.1 won. The rise in the won-dollar exchange rate continued for three trading days, gaining 19.4 won.

Financial markets feared the fourth wave of COVID-19 could dampen expectations of an economic recovery on Friday. “The high social distancing measures will have an impact on domestic consumption, especially the service sector,” said Park Sang-hyun, researcher at Hi Investment and Securities. “The market is also increasingly concerned that the fourth wave may be longer than expected. “

There is, however, speculation that the fourth wave will not lead to a stock market crash as it did in the first wave of the pandemic last year and will cease to be a shock in the short term. KOSPI suffered a correction of around 6% last summer in the second wave of COVID-19, and in the third wave of COVID-19 late last year, the stock market continued its decline. upward trend.

Some analysts even argue that the spread of COVID-19 could delay a hike in interest rates, serving as a favorable factor for the stock market. “The main driver of the stock market boom was low interest rates,” said Kim Hak-gyun, director of the research center at Shinyoung Securities. “Level 4 social distancing measures are bad news for the real economy, but they can help allay concerns about interest rate hikes. “

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