Kospi fails to reflect FTA euphoria

After the Korea-U.S. free trade agreement passed in the National Assembly on Tuesday afternoon, brokerage firms released reports projecting automobile, automotive parts and IT shares would rise.

But the government and ruling party’s enthusiasm failed to spill over to the local bourse as it retreated below the 1,800 level yesterday.

The market lost 2.36 percent from the previous day to close at 1,783.10.

Shares in Mando rose 2.59 percent to 198,000 won ($172), while S&T Daewoo, an auto parts supplier, gained 1.29 percent to close at 31,350 won.

However, the overall market fall was steeper, even dragging down the value of stocks that are expected to benefit from the pact.

Hyundai Motor, the nation’s leading automaker, saw its share price drop 2.27 percent to close at 215,500 won. Its affiliate Kia Motors, the nation’s No. 2 automaker, lost 1.24 percent to end at 71,500 won. Hyundai Motor’s affiliate and parts manufacturer Hyundai Mobis lost 1.28 percent to 309,500 won.

“Earlier in the day, the share values of automobile companies and textiles companies rose as they were seen as beneficiaries of the FTA,” a Samsung Securities analyst said. “But this initial optimism was diluted later in the day.”

By Lee Ho-jeong [ojlee82@joongang.co.kr]