Korea's stock market is staging a surge of more than 6% with the rare activation of a buy sidecar, but cosmetics and beauty-related stocks have failed to escape declines and are being left behind. Analysts point to market funds being strongly drawn into semiconductor and artificial intelligence (AI) stocks, while falling exchange rates are weighing on investor sentiment toward cosmetics stocks, which have a high export share.
According to the Korea Exchange on the 15th, as of 9:34 a.m. the KOSPI index stood at 7,324.87, up 468.04 points (6.83%) from the previous trading session. The KOSDAQ index was also up 41.16 points (5.25%) at 825.14. In early trading, buy sidecars were activated in both the securities market and the KOSDAQ market, sending a strong tailwind through the market.
Even amid the index rebound, cosmetics and beauty device-related stocks turned red across the board. At the same time, APR (278470) was trading down 0.13% from the previous session, and Amorepacific (090430) was also weak at down 0.08%. LG Household & Health Care (051900), a large-cap stock, fell 1.46%, and Kolmar Korea (161890), a cosmetics original development manufacturing (ODM) company, was down 1.88%. Pharmaresearch, a beauty device and regenerative medicine-related stock, also fell 2.67%, showing a relatively clear decline.
The main reason cited for the lone weakness of cosmetics and beauty-related stocks is fund outflows. As SK hynix's American Depositary Receipts (ADR) jumped 27.29% on the New York market in the previous session, liquidity in Korea's stock market on this day became increasingly concentrated across large-cap semiconductor and AI value chains, including Samsung Electronics and SK hynix. In the process of the index reclaiming the 7,300 level at once, a strong portfolio reshuffle centered on technology stocks took place, meaning investment funds are rapidly flowing out of other consumer goods sectors.
Downward pressure on exchange rates from changes in macroeconomic indicators also held back the export-driven K-beauty sector. The U.S. Consumer Price Index (CPI) for June recorded a 0.42% decline from the previous month, below market expectations, narrowing the probability of a Federal Reserve base rate hike in July to 16%. In contrast, expectations for a rate hike are strong domestically. As a result, government bond yields fell and the dollar weakened, with the won-dollar exchange rate entering a full-fledged downward trajectory, according to assessments. For cosmetics companies that have recently achieved steep export growth centered on overseas markets such as North America and Europe, a falling exchange rate is a factor that could negatively affect future export profitability and earnings estimates.
However, this is only a temporary supply-demand imbalance, and the outlook for cosmetics-related stocks is bright. In fact, major securities firms are continuing their positive assessments of major cosmetics-related stocks such as APR and Kolmar Korea. One securities industry official said, "The exchange rate has recently returned to the 1,400 won range, but the high exchange rate trend is still being maintained, and the explosion of global demand for Korean cosmetics continues."
