The Korean stock market experienced significant volatility due to the full resumption of short selling and mutual tariffs imposed by the United States during the week. From March 31 to April 4, the KOSPI index started at 2557.98 points and fell by 3.62% to 2465.42 points, while the KOSDAQ index decreased from 693.76 points to 687.39 points, down 0.92%. During this period, foreign investors sold a net 6.5 trillion won worth of securities, leaving the Korean stock market.
The Constitutional Court noted on the 4th that the political uncertainty surrounding President Yoon Suk-yeol's impeachment has been somewhat alleviated. With the transition to an early presidential election phase, it is expected that policy-related stocks of the next presidential candidates will experience fluctuations for the time being.
In the securities industry, there are predictions that the tariff risk from U.S. President Donald Trump will continue. Starting from April 5, a 10% universal tariff will be imposed on all countries, and from the 9th, mutual tariffs by country will be enforced. A 25% mutual tariff rate will apply to South Korea. There is a high possibility that additional tariffs on semiconductors and pharmaceuticals will be announced soon.
However, the domestic stock market has already factored in the Trump risk since the end of last year, and given that stock prices had already declined due to the impeachment situation, it is unlikely to see a sharp additional drop. Experts are focusing on the 46% mutual tariff imposed on Vietnam, noting that the performance of smartphone parts companies based in Vietnam could be affected. Related companies include Samsung Electro-Mechanics, LG Innotek, and LG Electronics.
With the impeachment crisis coming to an end, the domestic stock market may seek short-term rebound opportunities. This is because fiscal expansion and interest rate cuts are likely to emerge as policies to boost the stock market. Yang Hae-jeong, a researcher at NH Investment & Securities, said, "In the past, after an impeachment decision, the stock market has shown short-term rebounds," adding, "The following trajectory will be determined based on first-quarter performance and whether the U.S. will cut interest rates. NH Investment & Securities presented an estimated KOSPI band of 2360 to 2600 points for this week (April 7-11).
Lee Kyung-min, a researcher at DAISHIN SECURITIES, said, "An early presidential election is expected at the end of May or early June, and if the uncertainty is resolved along with a trend of won strength, foreign liquidity may also improve," adding, "At that time, the KOSPI could show relative strength while gaining momentum in its rebound."
DAISHIN SECURITIES observed that regardless of the presidential election results, expectations for stocks that can be promoted as national strategic industries—such as artificial intelligence (AI), bio, semiconductors, eco-friendly energy, and carbon neutrality technologies—are likely to increase. In the progressive political camp, industries like renewable energy and media & entertainment will likely benefit, while in the conservative camp, nuclear energy, the space industry, and finance are expected to see relatively greater benefits.
On the 10th and 11th in Korea, attention should be paid to the U.S. consumer price index (CPI) and producer price index (PPI) for March, as well as speeches from officials of the U.S. Central Bank (Fed). Although the effects of tariffs have not yet fully materialized, corporations may react to anticipated tariffs by proactively raising prices, and price increases for items subject to some tariffs may be seen.
On the 11th, Chicago Federal Reserve President Austin Goolsbee and Saint Louis Federal Reserve President Alberto Musalem will deliver consecutive speeches. President Goolsbee is classified as a dove (favoring monetary ease) and has voting rights at this year's Federal Open Market Committee (FOMC). President Musalem noted that while the impact of tariff increases on inflation should not be overlooked, it is also important to acknowledge it temporarily. It is expected that both presidents will express caution regarding the newly announced Trump tariff policy and its influence on the extent of interest rate cuts.
In the securities industry, stocks related to retail and convenience stores, which are less affected by tariffs, as well as stocks that can evade tariffs, have been suggested as alternatives. Na Jeong-hwan, a researcher at NH Investment & Securities, said, "Considering the overall decrease in demand caused by tariffs, domestic stocks and tariff-evading stocks are alternatives, and if negotiations begin by country after the tariff announcement, stocks that may suffer from tariffs, such as semiconductors and automobiles, could instead benefit."