Naver's 'new low', Kakao's 'whispering'... Korea's leading technology stock fluctuating on the US Nasdaq plunge

Naver’s ‘new low’, Kakao’s ‘whispering’… Korea’s leading technology stock fluctuating on the US Nasdaq plunge

The stock prices of Naver and Kakao, the leading technology stocks in Korea, are on a sharp decline. On the 5th (local time), the drop in the Nasdaq Index of the New York Stock Exchange had an impact on domestic technology stocks as well.

As of 2:40 pm on May 6th, Naver was trading at 271,500 won, down 10,500 won (3.72%) from the previous trading day. It also fell to 268,000 won during the day, setting a new 52-week low. The day Naver finished trading at 260,000 won was on July 2, 2020, about 22 months ago.

At the same time, Kakao is also trading at 84,200 won, down 5.39%. It is the first time in three months since January 27 that the stock price of Kakao fell below 85,000 won based on the closing price. In addition, Com2uS and Netmarble also fell 3% to record 52-week lows, and domestic IT and game stocks, which are considered growth stocks, are also weak overall.

The speculation that the aftermath of the US Federal Reserve Chairman Powell’s remarks about the exclusion of a ‘giant step (0.75 percentage point rate hike)’ had a major impact on the domestic tech stock market am. Fears that the Fed will tighten austerity throughout the year are again dominating the market. Some experts are still diagnosing that the possibility of a giant step in June is high despite Chairman Powell’s remarks. There is also the aftermath of a surge in government bond yields after reflecting Powell’s remarks a day late.

If interest rates rise, there is no need to take risks by investing in growth stocks that look forward to future growth, and the value of technology stocks, a representative growth stock, will fall more sharply. On the 5th (local time) in the New York Stock Exchange, the Nasdaq index, which focuses on technology stocks, closed at 12,317.69 points, down 4.99% from the previous trading day. This is the lowest level in over 17 months since November 30, 2020. Amazon recorded -7.56%, Google’s parent company Alphabet recorded -4.71%, and Tesla recorded -8.33%.

Regarding the current situation, Seo Sang-young, an analyst at Mirae Asset Securities, said, “It is burdensome to reverse the previous trading day’s rise, such as a rise in the Treasury bond yield in the evaluation that the US is still likely to raise the interest rate by 75 bp (1 bp = 0.01 percentage point) in June.” As a result, foreign purchases will decrease, which may continue to negatively affect the stock price of domestic technology stocks.”

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