EV stocks decline, defense stocks rise, as Trump victory sweeps market

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EV stocks decline, defense stocks rise, as Trump victory sweeps market

Published: 06 Nov. 2024, 18:29 Updated: 06 Nov. 2024, 20:51

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,563.51 points on Wednesday, down 0.52 percent, or 13.37 points, from the previous trading session. [NEWS1]

Korean stocks retreated on Wednesday with EV shares plunging as Donald Trump pulled ahead, and eventually declared victory, in the U.S. presidential race.

The former president had been projected to win the key swing states of North Carolina, Pennsylvania and Georgia by the time Korea's markets closed.

The local currency traded significantly weaker against the dollar, which surged to its highest since March 2020, nearing the 1,400 won mark, as analysts bet that the projected winner's proposed tariffs and immigration restrictions would push up U.S. prices.

The Kospi fell 13.37 points, or 0.52 percent, from the previous session to close at 2,563.51. The Kosdaq shed 8.5 points, or 1.13 percent, to 743.31. The benchmark index had opened higher earlier that day, reaching 2,592.75 at around 10:30 a.m., but took a downturn as Trump pulled further ahead of Vice President and Democratic presidential candidate Kamala Harris throughout the afternoon.

EV-related shares were among the hardest hit, as the former president has repeatedly maintained critical views of electric vehicles and indicated plans to repeal the Biden administration's expanded manufacturing subsidies.

LG Energy Solution plunged 7.02 percent to close at 390,500 won.

Samsung SDI fell 5.98 percent to 298,500 won. SK Innovation, the parent of battery maker SK On, dropped 4.64 percent to 113,100 won.

Hyundai Motor shed 3.95 percent to close at 206,500 won, and Kia declined 2.06 percent to 95,000 won.

Defense stocks, considered beneficiaries of a second Trump term, rallied strong, as did the price of bitcoin. The former president vowed to push U.S. allies to increase defense spending and vocally supported digital assets on the campaign trail.

Hanwha Aerospace rose 7.04 percent to 387,500 won. Korea Aerospace Industries climbed 2.89 percent to 60,600 won, and LIG Nex1 surged 6.35 percent to 259,500 won. Hyundai Rotem grew 3.11 percent to 62,900 won.

The price of Bitcoin, among digital assets for which the former president has voiced support on the campaign trail, surged to an all-time high, exceeding the $74,000 mark for the first time ever that day.

It reached 103.8 million won on Upbit, Korea's largest cryptocurrency exchange, around 3:20 p.m, and hovered around 100 million won as of 5:00 p.m.

Huh Jin-wook, chief economist at Samsung Securities, said that Trump’s tariff proposals could accelerate inflation and protectionist trends but warned investors not to “overreact” to the election results.

“A U.S. president’s political affiliation has not had a significant impact on economic or financial market performance since World War II,” Hur said.

However, Hur noted that the prospect of a “red sweep” could help to mitigate market volatility, noting that stocks and bonds “tend to become more volatile under a divided government” than they are under unified control.

Foreign investors off-loaded shares worth a net of 108.1 billion won that day, institutions picked up 50.38 billion won and retail investors 9.06 billion won.

The won-dollar exchange rate rose 17.6 won from the previous session to 1,396.20 won as of 3:30 p.m., after soaring as high as 1,399.7 won at around noon.

BY SHIN HA-NEE [[email protected]]