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Interactive Market Analysis: US vs. Korea

Policy Rates & Market Reactions

An Interactive Report on the Comparative Impact of Central Bank Policy on NASDAQ and KOSDAQ (2005–2025)

Report Introduction

Over the past two decades, equity markets in the United States and South Korea have navigated dramatic shifts in monetary policy. This interactive report, based on a comprehensive analysis from 2005-2025, examines how the tech-heavy U.S. NASDAQ and Korean KOSDAQ indices have reacted to changes in their respective central bank policy rates, uncovering why the NASDAQ often responds more sharply to policy shifts.

10x

Approx. NASDAQ growth from its 2009 trough to its 2021 peak.

Approx. KOSDAQ growth during the same period.

-33%

NASDAQ’s decline in 2022 during aggressive Fed tightening.

Quantitative Sensitivity to Interest Rates (2021-2023)

Regression analysis reveals NASDAQ’s much higher sensitivity. For every 1 basis point (0.01%) increase in the U.S. 10-Year Treasury yield, the NASDAQ showed a correspondingly larger negative return compared to the KOSDAQ.

Core Analysis: Why NASDAQ Reacts More Strongly

The report identifies several structural factors that explain the divergence in monetary policy sensitivity. These range from index composition and investor base to the fundamental ways corporations in each country are financed.

Primary Reason: Corporate Funding Structure

A crucial difference lies in how firms finance themselves. U.S. markets are capital-centric (bonds, equity), immediately transmitting policy changes through yields and valuations. Korea’s system is bank-centric, meaning policy effects are filtered through lending conditions, often muting or delaying the impact on equities.

Transmission Mechanism Flow

This flow highlights how a policy decision travels through each economy. In the U.S., the path is direct to capital markets. In Korea, it’s buffered by the banking system.

U.S. Path

Fed Rate → Bond Yields → Equity Valuations → NASDAQ

Korean Path

BOK Rate → Bank Lending Rates → Corporate Credit → KOSDAQ

Other Contributing Factors from the Report

1. Index Composition

NASDAQ is dominated by “long-duration” growth stocks whose valuations are highly sensitive to the discount rate. KOSDAQ’s smaller firms’ stock prices can be driven more by speculative narratives than DCF valuation, diluting the clear interest-rate linkage.

2. Investor Base

NASDAQ is a global playground for institutional capital that reacts swiftly to macro shifts. KOSDAQ is dominated by domestic retail investors who may be slower to react to policy signals.

3. Liquidity & Market Depth

NASDAQ’s high liquidity means it immediately prices in new policy information. KOSDAQ is less liquid and prone to policy interventions (e.g., short-selling bans) that can temporarily decouple it from fundamentals.

4. Policy Communication

Tech stocks on NASDAQ are extremely sensitive to Fed forward guidance, reacting even before actual rate hikes. The BOK’s communication has a more localized, less immediate impact on KOSDAQ traders.

5. Economic Context

The Fed’s actions shape the global economic cycle. The BOK is often reacting to both domestic conditions (e.g., household debt) and global spillovers from Fed policy, making its signal more complex.

Report Conclusion

NASDAQ’s sensitivity is a direct reflection of its global integration and market-based funding. KOSDAQ’s reaction is more muted, buffered by a bank-centric system and strong domestic factors.

Comparative Impact of Central Bank Policy Rates on NASDAQ and KOSDAQ (2005–2025)Download

MindsWings

MindsWings

Comparative Impact of Central Bank Policy Rates on NASDAQ and KOSDAQ

Policy Rates & Market Reactions

Report Introduction

Quantitative Sensitivity to Interest Rates (2021-2023)

NASDAQ vs. The Federal Reserve

KOSDAQ vs. The Bank of Korea

Core Analysis: Why NASDAQ Reacts More Strongly

Primary Reason: Corporate Funding Structure

Transmission Mechanism Flow

Other Contributing Factors from the Report

1. Index Composition

2. Investor Base

3. Liquidity & Market Depth

4. Policy Communication

5. Economic Context

Report Conclusion

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MindsWings

MindsWings

Report Introduction

Quantitative Sensitivity to Interest Rates (2021-2023)

NASDAQ vs. The Federal Reserve

KOSDAQ vs. The Bank of Korea

Core Analysis: Why NASDAQ Reacts More Strongly

Primary Reason: Corporate Funding Structure

Transmission Mechanism Flow

Other Contributing Factors from the Report

1. Index Composition

2. Investor Base

3. Liquidity & Market Depth

4. Policy Communication

5. Economic Context

Report Conclusion

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