Seoul shares dip to 17-month low on Trump tariffs; won sinks to 16-yr low
South Korean stocks fell by nearly 2 percent to a 17-month low Wednesday as the Donald Trump administration's sweeping tariffs stoked fears of an intensifying trade war between the United States and China. The local currency fell sharply against the US dollar.
The benchmark Korea Composite Stock Price Index fell 40.53 points, or 1.74 percent, to close at 2,293.70.
It marked the lowest closing since Oct. 31, 2023, when it finished at 2,277.99.
Trade volume was moderate at 692.55 million shares worth 9.17 trillion won ($6.18 billion), with losers outnumbering winners 758 to 145.
Foreigners and institutions sold a net 1.01 trillion won and 70.42 billion won worth of stocks, respectively, while individuals purchased a net 939.56 billion won.
The US' reciprocal tariffs, including 25 percent duties for South Korea, went into effect earlier in the day, which came on the heels of a minimum 10 percent baseline tariff that came into force on Saturday.
Trump also warned of additional 50 percent tariffs on China if Beijing does not withdraw its retaliatory 34 percent tariffs against his country, stoking fears of an escalating trade war between the world's two largest economies and its impact on the trade-dependent South Korean economy.
"The index could fall further as China's strong retaliatory measures are expected," Park Hee-chan, a researcher at Mirae Asset Securities, said.
Losses were wide and deep across the board.
Top-cap Samsung Electronics sank 0.93 percent to 53,000 won, and its chipmaking rival SK hynix tumbled 2.65 percent to 165,000 won.
Major bio firm Samsung Biologics lost 1.2 percent to 992,000 won, and Celltrion nosedived 5.27 percent to 154,500 won.
Leading battery maker LG Energy Solution declined 1.26 percent to 314,000 won, and No. 1 steelmaker POSCO Holdings dipped 0.8 percent to 249,500 won.
Top automaker Hyundai Motor slumped 0.67 percent to 178,000 won, and its sister affiliate Kia went down 0.59 percent to 83,800 won.
Leading defense equipment manufacturer Hanwha Aerospace shed 1.0 percent to 691,000 won, and top portal operator Naver decreased 1.5 percent to 176,900 won.
The local currency was trading at 1,484.1 won against the greenback at 3:30 p.m., down 10.9 won from the previous session, marking the lowest level since March 2009. (Yonhap)
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Korea Herald
3 hours ago
- Korea Herald
[Patricia Murphy] 'Big beautiful bill' a boondoggle
Days before the US House of Representatives passed President Donald Trump's 'big beautiful bill,' Moody's Ratings agency had an ominous warning about the US economy. Because of America's recent history of running up huge debts and deficits, and no change in sight, 'the United States' fiscal performance is likely to deteriorate' relative to similar countries. As a part of that warning, Moody's downgraded the country's credit rating from its Aaa score to Aa1. Despite that red flag, House leaders forged ahead, passing their 10-year tax-and-spend plan, the One Big Beautiful Bill Act, by a single vote. Unfortunately, the bill not only ignores Moody's debt warning, it looks more like one big, beautiful boondoggle. Included in the gargantuan bill are $4.5 trillion in tax cuts, more than $800 billion in cuts to Medicaid, food stamps and other social programs, and significant boosts in spending for defense and immigration enforcement. Costs of some social programs, including food stamps, are also shifted to states by the House. My colleague Tia Mitchell reported this week that Georgia officials could now be on the hook for more than $800 million in food spending if the Republicans' bill goes through. All of the cuts to social safety net programs came, in part, to help pay for the tax cuts in the bill, which are heavily weighted toward high-income earners. For example, the working-class tax breaks that Trump promised on the campaign trail, namely eliminating taxes on tips, overtime pay and car loan interest, will only last through the end of Trump's term in 2028. But the income tax cuts, including for the richest Americans, as well as tax breaks for estates and investment income all become permanent. The House also stuffed loads of perks for special interests into the 1,100-page bill. One measure bans states from passing new regulations on artificial intelligence for 10 years. So if Georgia lawmakers decide they want to limit the use of AI in Georgia classrooms, like they did with cellphones this year, the Big Beautiful Bill Act would stop that until 2036. It would also mean Georgia lawmakers could not pass SB 9, a bill to ban deepfakes in political ads, which passed the state House and Senate earlier this year, but did not get to final passage. A different measure, this one for gun dealers, was put into the bill by Georgia's US Rep. Andrew Clyde. The Republican from Athens owns two large gun stores, which both sell gun silencers. Clyde flipped from a 'no' to a 'yes' after the $200 tax on silencers was eliminated, at a cost of $1.4 billion. Of all of the special interests in the bill, the most special of all seems to be Trump himself. The bill mentions Trump's name 52 times. It also creates new $1,000 savings accounts for babies born during Trump's second term called 'Trump Accounts.' It even has language to make it harder for federal courts to enforce injunctions against executive branch officials, a lot like the injunctions Trump has run into as he tries to expand his own powers in the White House. Every spending bill is a political document, of course, and a Republican Congress cutting taxes and rolling back Biden-era climate measures is no surprise. But what is a surprise is the bill's price tag, $3.94 trillion, which will all get piled onto the nation's $36 trillion debt that Moody's just warned about. For every tax cut and spending measure that may be a good idea on its merits, it's all getting paid for with more borrowed money. It's a long way from the Tea Party movement, which exploded onto the scene in 2009 after the US Congress passed big bailouts for banks following the 2008 financial crisis. The national debt then was $13 trillion, one-third of what it is today. Republicans then promised they would finally tackle the debt and the deficit. This bill does the opposite. Even Elon Musk, the mastermind of the "Department of Government Efficiency," said so on his last day as a government employee this week, adding that the bill 'undermines the work that the DOGE team is doing.' 'It can be big or beautiful, but I don't know if it can be both,' he said. If I were a House Republican at the beginning of this year, I would have had one job: to reduce the debt and deficit. With Trump in the White House, Republicans in control of Congress, and Musk promising to modernize and remake the federal government, the House bill was supposed to be the vehicle for all of that to happen. Instead, they just passed one big, beautiful boondoggle.
Korea Herald
19 hours ago
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Money, political future of Lee Jun-seok hangs on 10% vote
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Korea Herald
20 hours ago
- Korea Herald
Postelection momentum: Will new leadership lift Kospi past 2,800?
With policy clarity in sight, investors turn bullish — Kospi seen testing 3,000 After months of political limbo, South Korean capital markets are brimming with anticipation as Tuesday's presidential election ushers in new leadership and an end to a prolonged policy vacuum. While candidates differ in the specifics of their market-boosting pledges, they share common ground on one urgent issue: the need to resolve the persistent 'Korea discount' that has long weighed on valuations. Market watchers expect this shared resolve — alongside broader investor optimism — to fuel a postelection rebound, regardless of who takes office. Investor sentiment points to a gradual Kospi recovery, with the index likely to test 2,800 in the second half — a level not seen since July 2024. 'Expectations for economic stimulus are likely to strengthen after the election, and a shift from policy vacuum to active support could drive a stronger won and foreign buying,' said Daishin Securities analyst Lee Kyoung-min. However, Lee flagged a potential short-term pullback as the market digests preelection gains. The Kospi broke above 2,700 last week for the first time in nine months on hopes for political clarity. While forecasting a near-term trading band of 2,550 to 2,800, Lee reaffirmed his year-end target of 3,000 points, expressing confidence that improved fundamentals under the new administration could ultimately push the market to that level. Other brokerages have also raised their targets, with wider bands reflecting increased volatility. Korea Investment & Securities projects a 2,400–2,900 range, expecting third-quarter consolidation followed by a gradual fourth-quarter uptrend. NH Investment & Securities sees 2,350–3,000, while Shinhan Securities targets 2,550–2,780. Historical precedent supports the optimism. Eugene Investment's Huh Jae-hwan, analyzing nine presidential elections since 1981, found the Kospi gained after six. Huh noted that, on average, the index rose 3 to 4 percent in the first month and 14 to 16 percent over the year, typically driven more by easing political uncertainty than specific policy pledges. Analysts emphasized that the Kospi's sustained growth will hinge on foreign investor flows, particularly if the won continues to strengthen. 'A move above 2,600 will need renewed foreign inflows to maintain momentum,' said Noh Dong-kil of Shinhan Securities, calling foreign investment the key driver of a second-half rally. Foreign investors had been net sellers for nine straight months since August, offloading 15.4 trillion won ($11.2 billion). That sell-off dragged the Kospi from a near-2,900 peak last July to as low as 2,300. Sentiment rebounded in May as easing US tariff fears and signs of political clarity prompted foreign investors to buy 1.2 trillion won over the month, followed by an additional 240 billion won purchase Monday. The key driver, analysts say, is currency. 'Foreign inflows are closely tied to dollar moves,' said Kim Soo-yeon of Hanwha Investment & Securities, noting that foreigners typically turned to net buyers about a month before the won strengthened. After spending much of the year weaker than 2024 levels, and briefly approaching 1,500 won per dollar, the currency slipped to 1,369 won on May 26, its first dip below last year's mark. It has since stabilized in the high-1,300 range. Daishin's Lee expects further gains. 'Anticipation of stimulus and industrial policies should lift demand confidence and add upward pressure on the won,' he said, projecting the won to enter the low 1,300s against the greenback by the third quarter. Pro-market campaign pledges Still, much will depend on how swiftly the new administration delivers, with foreign inflows likely to stay cautious until it fills the policy vacuum left since December. Liberal candidate Lee Jae-myung of the Democratic Party of Korea has pledged to usher in a 'Kospi 5,000 era' by strengthening minority shareholder protections. He calls for overhauling the Commercial Act to improve corporate governance, proposing codified fiduciary duties, expanded cumulative voting and safeguards against spinoff listings. To bolster market integrity, Lee proposed to permanently ban those convicted of stock manipulation, along with stronger real-time surveillance and stricter clawback rules on short-swing profits. He also reaffirmed Korea's push for inclusion in Morgan Stanley Capital International's developed markets index. Conservative rival Kim Moon-soo of the People Power Party has largely echoed the previous administration's market-friendly stance, proposing dividend tax cuts and incentives for long-term investment. He called for stronger investor outreach through presidential road shows abroad and a financial policy council comprising regulators and private-sector experts. Kim supports limited governance reform through the Capital Markets Act, not the broader Commercial Act. His proposals target listed firms only, aiming to boost shareholder protection and board expertise, while easing inheritance tax burdens during business succession. Like Lee, he also backs tougher penalties for stock crimes, including life sentences and punitive damages. In the cryptocurrency space, the two candidates struck rare common ground. Both backed the launch of spot crypto exchange-traded funds — a key industry demand — while supporting the establishment of a regulatory framework for emerging digital assets such as stablecoins and security token offerings. Separately, Lee emphasized structural reform, including centralized oversight and lower transaction fees, while Kim leaned toward deregulation, backing institutional trading and the removal of the one-bank-per-exchange rule. Global headwinds may cloud optimism Risks remain, as uncertainty over global trade and Korea's weak growth outlook could temper capital markets' recovery. Korea's export-reliant economy remains exposed to US tariff hikes, with a bilateral deal expected in early July. Until then, outbound shipment prospects remain murky, adding pressure to an economy forecast to grow less than 1 percent this year. 'Trump is likely to continue tariff threats, currency talk and trade renegotiations while pushing tax cuts and deregulation,' said Na Jeong-hwan of NH Investment & Securities. Markets may grow numb to tariff headlines, he added, but US political risks could intensify into September. Still, with local markets significantly undervalued, Korea's domestic outlook offers room for optimism. 'As long as local markets follow US trends, expectations for fiscal and monetary stimulus under new leadership, coupled with structural reforms, should help lift the Kospi,' Na said.
