The domestic stock market lost what it had accumulated over the past month in just one day. U.S. President Donald Trump reignited fears of a 'tariff war', and the fallout from the sharp decline in stock prices of big tech corporations in the U.S., including NVIDIA, swept over the KOSPI and KOSDAQ markets.
The KOSPI index closed at 2532.78 on the 28th, down 88.97 points (3.39%) from the previous day. This marked the largest drop since the so-called 'Black Monday and Friday' in August last year. Most of the top market capitalization stocks, including Samsung Electronics, SK hynix, LG Energy Solution, Samsung Biologics, and Hyundai Motor, saw their stock prices decline.
The KOSDAQ index also finished at 743.96, down 26.89 points (3.49%). This was the largest drop since December 9 last year, when the political situation was unstable following the president's impeachment. In the KOSDAQ market as well, all of the top 20 market capitalization stocks, including the leading stock Alteogen, saw declines from the previous day.
Foreign and institutional investors flooded the market with sell orders, dragging down the index. In the KOSPI market, foreigners and institutions sold a net 1.5533 trillion won and 615.9 billion won, respectively. Only individuals stepped in with net purchases of 2.0326 trillion won. In the KOSDAQ market, foreigners and institutions also showed a selling advantage of 283.3 billion won and 123.7 billion won, respectively, while individuals made net purchases of 408.6 billion won.
Foreigners also unloaded both spot and futures. They net sold over 1.8 trillion won in KOSPI 200 futures, marking the fifth-largest scale ever estimated.
Both the KOSPI and KOSDAQ indices saw only a slight increase on a monthly basis. The KOSPI index rose from 2517.37 at the end of January to 2621.75 the previous day, up 104.38 points (4.1%), but this steep drop resulted in losing 85% of that gain. The KOSDAQ index experienced a similar trend, jumping 5.8% (42.56 points) from 728.29 at the end of last month to 770.85 the previous day, but that day's increase shrank to the 2% range.
Concerns about the impending 'tariff war' shook the market. Overnight, the stock price of semiconductor company NVIDIA fell by over 8% on the New York Stock Exchange, reflecting weakness among major technology corporations. In the Seoul foreign exchange market, the exchange rate of the won against the U.S. dollar, which had shown signs of stability, re-entered the 1460 won range.
President Trump said that if the issue of synthetic drugs entering the U.S. is not resolved or significantly improved, a 25% tariff will be imposed on Canada and Mexico starting March 4. He also warned of an additional 10% tariff on China. Notably, Trump had announced the tariff imposition date on Canada and Mexico as April 2 during the cabinet meeting the day before, but reversed this decision in just one day, causing turmoil in the market.
Additionally, it is pointed out that this day coincides with the rebalancing of the Morgan Stanley Capital International (MSCI) index and that the Korean stock market will be closed until the 3rd due to the Samil holiday, leading to a heightened risk-averse sentiment. Concerns ahead of the U.S. personal consumption expenditures (PCE) announcement for January also contributed to the steep drop.
As President Trump has hinted at universal tariffs, many expect volatility in the market to continue for the time being. Yang Il-woo, a researcher at Samsung Securities, noted, "Concerns that the strength of the universal tariff could increase over time based on the tariffs on Mexico and Canada starting March 4 may lead to an expansion of volatility."
Attention should also be paid to the National People's Congress and the Chinese People's Political Consultative Conference, the largest political events in China, starting on March 4. Coincidentally, the first day of these events coincides with the start date of the additional tariffs announced by the Trump administration, which could lead to concrete measures being taken. The Chinese government's economic growth target will also be announced.
There are opinions that the adjustments on this day could present buying opportunities at lower prices depending on the sector. Kim Dae-jun, a researcher at Korea Investment & Securities, stated, "The average price-to-earnings ratio (PER) of the KOSPI index over the past 10 years was about 9.1 times, which corresponds to the current range of around 2550. Below the 2550 mark, the valuation burden is lighter." He added, "The key is sector selection, and sectors related to domestic demand that can avoid tariff issues and consumer stocks related to China could serve as short-term alternatives."