Seoul shares end lower on retail selling amid tariff worries
The benchmark Korea Composite Stock Price Index fell 4.22 points, or 0.13 percent, to close at 3,188.07. The main index rose 0.39 percent for the week.
Trade volume was moderate at 389.98 million shares worth 11.84 trillion won ($8.5 billion). Decliners outnumbered gainers 589 to 303.
The KOSPI reversed earlier gains after opening higher, tracking overnight gains on Wall Street. The Dow Jones Industrial Average rose 0.52 percent and the tech-heavy Nasdaq composite climbed 0.75 percent.
Individuals sold a net 340.72 billion won worth of stocks, offsetting stock purchases by institutions and foreigners of 61.85 billion won and 187.72 billion won, respectively.
Trump recently notified key US trading partners of new tariff rates set to take effect Aug. 1 unless they offer sweetened terms in ongoing negotiations.
Investors are awaiting second-quarter earnings results from major companies in the coming weeks for clues on the market's direction, while keeping an eye on further developments in US trade policy, analysts said.
In Seoul, large-cap stocks were mixed.
Leading shipbuilder HD Hyundai fell 2.18 percent to 134,800 won, and state-run utility firm Korea Electric Power Corp. declined 0.68 percent to 36,250 won.
National flag carrier Korean Air dropped 0.95 percent to 25,950 won, and No. 1 shipping firm HMM shed 0.99 percent to 25,000 won.
Among gainers, top carmaker Hyundai Motor rose 0.24 percent to 210,500 won and market behemoth Samsung Electronics climbed 0.6 percent to 67,100 won.
Leading steelmaker Posco Holdings gained 1.14 percent to 311,000 won, and leading battery firm LG Energy Solution rose 1.74 percent to 322,500 won.
The local currency was quoted at 1,393.00 won against the greenback at 3:30 p.m., down 0.4 won from the previous session. (Yonhap)
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Korea Herald
3 minutes ago
- Korea Herald
[Yoo Choon-sik] What South Korea must see beyond US tariff deal
South Korea's last-minute trade agreement with the United States — concluded just under two days before the deadline — has dominated headlines and conversations both domestically and internationally. The attention is understandable. Since the beginning of President Donald Trump's second term earlier this year, US tariff policy has emerged as one of the most destabilizing forces in the global economy. For South Korea — a country that relies heavily on manufacturing and exports — the stakes could not have been more critical. The agreement sets US tariffs on most South Korean exports at 15 percent, a significant reduction from the initially proposed 25 percent. As part of the broader deal, South Korea has committed to investing $350 billion in the United States, including a $150 billion shipbuilding fund. The remaining $200 billion will be funneled into strategic sectors including semiconductors, nuclear energy, secondary batteries and biotechnology. While further details are expected to be revealed at the forthcoming summit between the two nations' leaders, the contours of this investment commitment already signal a recalibration in South Korea's trade and industrial strategy. President Lee Jae Myung rightly hailed the deal as both a diplomatic and economic achievement. It not only lowers tariff burdens, but also removes a significant source of uncertainty. Yet while South Korea's export-led model has been the backbone of its 'economic miracle' over the past half-century, it leaves the country acutely vulnerable to shifts in global trade dynamics and foreign policy. In stark contrast to the robust manufacturing sector, South Korea's domestic service industries remain underdeveloped. Their contribution to national gross domestic product and employment continues to lag behind those of service sectors in most other advanced economies. A vibrant service sector provides a buffer against external shocks, encourages inclusive employment, enhances human development and supports long-term economic resilience. For countries like South Korea that aim for both sustained prosperity and social cohesion, building a stronger domestic service economy is not just a desirable policy goal — it is a strategic necessity. A recent report by the Bank of Korea offers a timely assessment of the nation's service sector. On the surface, there has been progress. Since the 1990s, the share of manufacturing value added in nominal GDP has plateaued in the mid-to-high 20 percent range. Meanwhile, the service sector has steadily expanded, accounting for 44 percent of nominal GDP as of 2024. The share of workers in manufacturing has declined steadily since peaking at 28 percent in 1989. By contrast, the service sector now accounts for 65 percent of all employed workers in the country. Since the 1990s, services have been the main engine of job creation, and this trend shows no signs of reversing. Since the mid-1990s, however, productivity in services has consistently lagged behind that of manufacturing, with minimal improvement over time. For more than 20 years, service sector productivity has remained stuck at just 40 percent of manufacturing productivity. Making service sectors more productive This imbalance is particularly striking when compared to other manufacturing-heavy economies. Even in Japan and Germany — nations with similarly strong industrial foundations — the productivity gap between services and manufacturing is notably smaller. The Bank of Korea identifies this chronic inefficiency as one of the primary structural bottlenecks constraining South Korea's long-term growth potential. The COVID-19 pandemic has only magnified these vulnerabilities. In the wake of the global health crisis, South Korea's economic growth rate has declined sharply relative to pre-pandemic levels. The primary driver of this slowdown has been the diminished productivity of the private service sector. This has serious implications. In a world increasingly shaped by knowledge, data and digital platforms, a country's capacity to generate high-value services is becoming as important as its ability to manufacture high-quality goods. While the US tariff deal provides welcome short-term relief, it must serve as a broader catalyst for economic transformation. South Korea now stands at a pivotal moment — facing mounting structural, demographic and geopolitical challenges. A new strategy is needed, and the Bank of Korea outlines three core imperatives. South Korea must establish a comprehensive legal and institutional foundation for industrial policy that reflects the convergence of manufacturing and services. Current regulatory systems are ill-suited to accommodate hybrid sectors and emerging business models. Bold regulatory reforms are needed to create space for innovation across sectors. South Korea has an enviable repository of intellectual assets, technical know-how and operational capabilities accumulated through decades of industrial leadership. This expertise should now be redeployed into developing AI- and data-driven industrial services. Areas such as digital content, telemedicine, logistics and smart manufacturing offer fertile ground for combining South Korea's technical strengths with global service demand. The country's economy is burdened by a disproportionately high number of small-scale, often involuntarily self-employed workers. Rather than attempting to shrink this sector, the government should expand the availability of quality jobs in larger, more stable firms. At the same time, institutional and financial support for startups and business transitions must be enhanced to inject vitality into the broader economy. As South Korea's president heads off on a well-deserved summer holiday, it is a fitting moment for reflection. The successful tariff agreement with Washington offers breathing room, but it must not foster complacency. Now is the time to convert a reactive diplomatic victory into a proactive economic strategy. South Korea must shift from a narrow export-dependent model to a more balanced and resilient growth paradigm, one that fully harnesses the potential of its service sector. The agreement with the United States must be the beginning of a new chapter — one in which external pressure sparks internal reform and short-term compromise paves the way for long-term renewal. With vision, discipline and courage, South Korea can turn this moment of relief into a lasting opportunity for transformation. The country has risen to great challenges before. It can — and must — do so again.
Korea Herald
3 minutes ago
- Korea Herald
[Editorial] Resetting the alliance
Lee, Trump prepare for summit that may redefine Korea-US alliance President Lee Jae Myung's summit with US President Donald Trump this month is expected to mark a turning point in the Korea-US alliance. It will be their first in-person meeting since Trump returned to the White House in January, and it follows Seoul's hard-won tariff deal that secured trade terms on par with those for Japan. But economic parity is only part of the story. As security threats multiply and US foreign policy grows increasingly transactional, the summit presents an opportunity for South Korea to reanchor the alliance in predictability before global volatility intensifies. Lee, a progressive leader with no personal ties to Trump, is engaging a counterpart known for breaking diplomatic conventions and questioning traditional alliances. But Lee's emphasis on pragmatism — not flattery or defiance — is appropriate. His administration's goal is to reset the terms of engagement on clearer, firmer ground with a White House that demands more and guarantees less. At the top of the agenda is defense cost-sharing. During his first term, Trump demanded a fivefold increase in South Korea's contribution to the costs for hosting US troops on the peninsula. While a 2021 agreement put the issue on pause, concerns remain that Trump may revive the demand. Lee's team is preparing to resist sharp hikes and reframe the discussion around mutual benefits, not transactional arithmetic. South Korea's strategic importance cannot be reduced to dollars and cents. Its position between China and US-led alliances, combined with advanced defense and technological capabilities, makes it a regional linchpin. Hosting key military assets and conducting joint exercises strengthens collective readiness and reinforces the US presence in Northeast Asia. Nuclear deterrence is another critical issue. With North Korea expanding its arsenal and deepening ties with Russia, Lee is expected to push for renewed clarity on the US nuclear umbrella. A credible extended deterrence framework remains essential to South Korea's security, especially as Pyongyang shows no sign of restraint. Another priority is trilateral coordination with Japan. The Camp David process in August 2023, under the previous Joe Biden administration, strengthened Korea-US-Japan cooperation on missile tracking and early warning systems. Trump has yet to indicate whether he supports this framework or sees it merely as a holdover. Seoul will press for assurance that trilateral security cooperation is not undermined by a return to one-on-one bargaining. The recent tariff agreement offers a useful model. After months of low-profile negotiations, South Korea secured exemptions from certain US tariffs — a parity Japan already enjoyed. This outcome is viewed in Seoul as proof that diplomacy remains possible under Trump, if grounded in shared interests and quiet persistence. The challenge now is to apply that approach to defense, where uncertainty can be more damaging. Some critics argue that Trump's approach to alliances remains too mercurial. The broader question is how to 'modernize the alliance' — Washington's term for pressing allies to shoulder more of the defense burden and align with its strategy to keep China at bay. Whether Trump will engage Seoul in a serious, forward-looking conversation or pursue headline-driven concessions remains unclear. It is also uncertain whether the Trump administration, absorbed in domestic politics, fully appreciates the risks of strategic drift in East Asia, where tensions could escalate without warning. For Lee, the summit can be seen as a credibility test. His domestic critics are watching for signs of miscalculation or overreach. But if he returns with a firmer security road map, renewed deterrence commitments and no unpleasant surprises, he will have shown that South Korea can chart its course even amid unpredictable leadership in Washington. The talks are unlikely to smooth every wrinkle, yet they could mark a step toward a more grounded and resilient alliance — one shaped by the demands of a volatile era.
Korea Herald
9 hours ago
- Korea Herald
FM Cho says Lee-Trump summit unlikely to be delayed to next month
Foreign Minister Cho Hyun said Sunday last-minute coordination to set a date for a summit between President Lee Jae Myung and US President Donald Trump is under way, noting the envisioned meeting will not be delayed to next month. Last week, Trump announced that Lee will visit the White House in two weeks, as he announced Washington has agreed to lower "reciprocal" tariffs on South Korea to 15 percent from the proposed 25 percent in return for massive investments and market opening. Cho made the remark as he arrived in Seoul after back-to-back visits to the United States and Japan for his first talks with his counterparts since the launch of the Lee administration in June. Cho said his US visit, which included meetings with senior officials, including Secretary of State Marco Rubio, served as an occasion to reaffirm Washington's commitment to extended deterrence. "(We) reaffirmed the steadfast South Korea-US combined response posture, and extended deterrence and agreed to continue to cooperate going forward," Cho said. When asked about the Trump administration's push to "modernize" the alliance, Cho said the move involves taking various necessary measures, such as strengthening defense capabilities in the face of a stern international security environment, while brushing off concerns such push will affect Seoul's ties with China. Cho said in-depth talks over a possible role change of US troops in South Korea did not take place, saying the two sides agreed to discuss additional matters in working-level talks going forward. Addressing the possibility the US may seek to reset security issues following the tariff deal, Cho said he believes the allies could reach mutually beneficial agreements in the defense sector. (Yonhap)
