Kospi bucks global upward trendInvestors on the Korean markets turned pessimistic on Friday, ending a six-day winning streak as reports suggested that an end to the U.S.-China trade war may not be as close as expected.
The main Kospi bourse started higher on Friday, but shed 0.33 percent to close at 2,137.23 compared to the previous trading day. The bio-and-tech heavy Kosdaq also declined 0.23 percent to 664.60.
The performance marks contrast the high-flying stocks in the U.S. overnight and other neighboring Asian countries, including Japan, after reports that the two economic superpowers agreed in principle to cancel tariffs in phases.
The Dow Jones industrial average jumped 0.66 percent to 27,674.80, an all-time high, while the S&P 500 rose to its second all-time high of the week, of 3,085.
Investors bet on a positive outcome of the trade dispute after China made it public that an agreement had been reached.
Gao Feng, a spokesperson for China’s Commerce Ministry, said on Thursday that both parties had agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster, while declining to clarify a timetable.
But the United States remained more cautious, and a Reuters report that the tariff rollback faced fierce opposition from White House officials raised speculation that it is too early to celebrate.
White House trade adviser Peter Navarro, said in an interview with Fox Business Network, “There is no agreement at this time to remove any of the existing tariffs as a condition of the phase one deal.”
Investors took a cautious approach to the ongoing developments of the trade deal discussion, analysts said.
“There are still worries over whether the United States will accept the tariff cancelation proposal,” said Noh Dong-gil, analyst at NH Investment & Securities. “The concerns are reflected on the indices today.”
Kim Doo-un, an analyst at KB Securities, echoed the sentiment.
“At first, there were expectations, but the idea of phasing out tariffs is starkly different from the previous stance by the United States such as delaying tariff imposition,” Kim said. “So, a market consensus has yet to be made about whether U.S. President Donald Trump will settle on the current agreement or return to the tougher position ahead of reelection,” he said.
As for next year, analysts took an optimistic outlook as Korea will likely benefit from improvements in the tech and economic cycles.
“We see that Korea is bottoming out from the down cycles in the economy and semiconductor industry,” Kim continued, “And the upward momentum has been built, although the recovery won’t be that dramatic, still better than this year.”
Other brokerages provided a bullish projection for the 2020 markets.
Meritz Securities, for instance, suggested a range between 2,000 and 2,500 while Hana Financial Investment set the band of 2,000 and 2,450.
BY PARK EUN-JEE [email@example.com]