KOSPI Suffers Steepest Drop In Four Months On Tax Reform Fears, Trade Tensions
The market shed 126.03 points as foreign investors dumped local equities, pulling out an estimated 656 billion won. The sell-off followed the South Korean government's proposal to raise corporate taxes and lower capital gains thresholds for large shareholders, a move widely seen as unfriendly to capital markets.
Heavyweight stocks led the rout. Samsung Electronics fell 3.5%, while chipmaker SK Hynix dropped 5.7%. Automakers Hyundai and Kia, along with defence contractors and other export-oriented firms, also posted steep losses.
The tech-heavy KOSDAQ index fared even worse, plunging 4.03%, reflecting heightened concerns over the sector's vulnerability to policy and external shocks.
Currency markets also reacted sharply. The South Korean won weakened past the 1,400 won per US dollar mark, its lowest level in over two months, as capital outflows gathered pace.
Adding to the pressure were escalating global trade tensions. The US recently announced fresh tariffs of up to 15% on key South Korean exports, compounding worries about the country's trade outlook.
Outlook: Analysts warn that investor sentiment is likely to remain fragile in the near term. Market watchers are now closely monitoring the government's next steps and potential adjustments to the proposed tax measures.
Until then, volatility is expected to persist, with traders looking to the third quarter data and policy signals for clarity. Related
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