Stocks tumble, won weakens as Trump tariffs ripple through nation

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Stocks tumble, won weakens as Trump tariffs ripple through nation

A screen at the Korea Exchange shows the Kospi closing at 2,453.95 points, down 63.42 points or 2.52 percent, with a monitor displaying the closing prices of other Asian stock markets including Japan's Nikkei 225 and Taiwan's Taiex at the bourse operator's headquarters in western Seoul on Feb. 3. [NEWS1]

A screen at the Korea Exchange shows the Kospi closing at 2,453.95 points, down 63.42 points or 2.52 percent, with a monitor displaying the closing prices of other Asian stock markets including Japan's Nikkei 225 and Taiwan's Taiex at the bourse operator's headquarters in western Seoul on Feb. 3. [NEWS1]

 
Korea is feeling the heat of the freshly ignited North American tariff war. Its stock market and the value of its currency tumbled on Monday, making market participants jittery regarding the potential implications of rising trade barriers on the export-driven nation.

 
The Kospi fell 2.52 percent, or 63.42 points to close at 2,453.95 on Monday.

 

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The benchmark index dipped below the 2,500 threshold immediately after the market opened and plunged as low as 2,437.61 mid-trading at 12:10 p.m., down 3.17 percent from the previous session.

 
The daily drop of 63.42 points was the steepest since Dec. 9 last year, when the Kospi plunged to the year’s low following the first bid to impeach President Yoon Suk Yeol.

 
Foreigners off-loaded shares worth 869.2 billion won ($593.4 million), and institutional investors shed 372.9 billion won, while retail investors buffered the drop by picking up 1.13 trillion won.

 
Losers far outnumbered gainers by 825 to 96, with most large caps losing ground.

 
Samsung Electronics slipped 2.67 percent to 51,000 won, and SK hynix fell 4.17 percent to 190,900 won.

 
Battery maker LG Energy Solution fell 4.4 percent to 336,500 won.

 
Kakao, on the other hand, soared 9 percent following reports that OpenAI CEO Sam Altman will visit Korea to finalize an AI-related partnership with the tech giant.

 
The Kosdaq dropped 3.36 percent, or 24.49 points, to close at 703.80, after reaching 700.57 mid-trading that day.

 
Other Asian stock markets also lost ground on Monday. Japan’s Nikkei 225 index slipped 2.66 percent and Australia’s S&P/ASX200 fell 1.79 percent. Taiwan's Taiex Index dropped 3.53 percent.
 
The won sharply depreciated against the dollar as well.

 
The won-dollar exchange rate rose 14.5 won to close at 1,467.2 per dollar as of 3:30 p.m.

 
After opening at 1,466 won per dollar, up 13.3 won from the previous session, the exchange rate briefly soared to 1,472.50 before moderating to around the 1,470 mark.

 
The market jitters stemmed from concerns regarding the potential implications of the trade war triggered by Washington’s decision to impose significant tariffs on key trading partners.

 
The White House announced on Saturday that the United States would impose 25 percent tariffs on imports from Canada and Mexico and 10 percent tariffs on imports from China starting Tuesday. Canada and Mexico announced retaliatory tariffs in return.

 
U.S. President Donald Trump signaled that his next target would be the European Union, to which the eurozone said that it would “respond firmly.”
 
While Korea was not involved in the latest round of tariff implementation, concerns of a rapidly rising protectionist trend fueled market anxiety, nudging investors away from riskier assets and toward safer ones.

 
The threat of a universal tariff looms heavily over Asia’s fourth-largest economy, which is heavily reliant on the U.S. market for chip and automotive exports.

 
“Although Korea was not included on the list of countries subject to higher tariffs this time, it is likely to be targeted in the next round of tariff increases along with the EU and others considering the country’s trade surplus with the United States,” noted Jung Sung-tae, a senior economist at Samsung Securities.

 
Samsung Securities estimated that a 10 percent universal tariff could erode Korea’s exports by 5 percentage points.

 
Acting President and Minister of Economy and Finance Choi Sang-mok speaks during a meeting with exporter companies at the government complex in central Seoul on Feb. 3. [MINISTRY OF ECONOMY AND FINANCE]

Acting President and Minister of Economy and Finance Choi Sang-mok speaks during a meeting with exporter companies at the government complex in central Seoul on Feb. 3. [MINISTRY OF ECONOMY AND FINANCE]

 
Acting President and Minister of Economy and Finance Choi Sang-mok vowed to “employ all resources available” to address the fast-changing trade environment during a meeting with domestic exporters on Monday.
 
“Tensions are rising over President Trump’s ‘America First’ policies,” said Choi. “The government will closely look into issues for each industry to ensure a soft landing of the Korean economy in this new environment.”

 
The Korean government had previously promised to provide a record 360 trillion won in financing to exporters this year to ensure a stable flow of liquidity.

 
The acting president expects Korea’s exports to rebound in February, even after snapping a 15-month growth streak in January, attributing the downturn to the month's comparative lack of business days due to the Lunar New Year.


BY SHIN HA-NEE [[email protected]]
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