Buoyed at the open by gains in U.S. artificial intelligence (AI) stocks, the domestic market ended slightly lower on caution over a potential U.S. federal government shutdown. Historically, shutdowns have not delivered a major shock to the stock market. However, the market sees uncertainty being layered onto rate-cut expectations—the basis of the current rally—if key indicator releases are delayed by a shutdown.
According to the Korea Exchange on the 30th, the Kospi closed at 3,424.60, down 6.61 points (0.19%) from the previous session. The index opened at 3,436.00, up 4.79 points (0.14%) from the day before, extended gains to as high as 3,443.38, then swung and turned lower. Trading volume was 495.49 million shares, and transaction value was 956.28 billion won.
There was no clear buying force on the main board. Institutional investors alone net bought 84.2 billion won, helping defend against a decline in the index. Individuals and foreigners net bought 1.9 billion won and 25.9 billion won, respectively. However, in the Kospi 200 futures market, foreigners finished transactions with a selling advantage of 84.7 billion won.
It appears to reflect heightened caution as worries over a U.S. federal government shutdown grew. U.S. President Donald Trump met with bipartisan leaders the day before to avoid a shutdown, but they failed to reach agreement on issues including extending subsidies for the public health insurance "Obamacare." The scheduled shutdown time is 12:01 a.m. on the 1st of next month, Eastern time. On the U.S. prediction market platform Polymarket, the probability of a government closure is above 80%.
Hwang San-hae, an analyst at LS Securities, said, "Considering President Trump's hands-off approach and the Democrats' hard line on welfare policy, the likelihood of a U.S. federal government shutdown is quite high," adding, "Unlike the real economy, the statistical correlation between U.S. shutdowns and market declines is minimal, but delays in the release of key indicators such as employment could shake rate-cut expectations."
Top market-cap stocks ended mixed. Samsung Electronics and SK hynix, which opened higher early in the session, fell 0.36% and 0.43%, respectively. LG Energy Solution, Samsung Biologics, KB Financial, and Doosan Enerbility also declined.
By contrast, HD Hyundai Heavy Industries rallied on news it will formally begin maintenance, repair and overhaul (MRO) work for the U.S. Navy's 7th Fleet. Shipbuilders such as Hanwha Ocean and HJ Shipbuilding & Construction, which had corrected after giving back expectations for the Korea-U.S. shipbuilding cooperation project "MASGA," and equipment names such as Samsung Heavy Industries also rose.
Defense names also advanced across the board on reports that the U.S. Department of Defense is pushing to boost missile production in preparation for a China deployment, lifting Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Hanwha Systems, among others.
Meanwhile, NAVER and Mirae Asset Securities, which had risen on expectations of a merger with Dunamu, operator of the Upbit virtual asset exchange, fell at the close as profit-taking emerged. Hanwha Investment & Securities, which was reported to be selling equity in Dunamu, maintained firm momentum.
On concerns about a prolonged slump in ocean freight rates, shippers such as HMM and Pan Ocean, as well as transportation names like Korean Air and CJ Logistics, fell in tandem.
KCC scrapped its plan to dispose of treasury shares in full, finishing transactions at 384,000 won, up 25,000 won (6.96%) from the previous day. Earlier, KCC had announced plans to dispose of the 17.24% equity it holds as treasury shares, including issuing exchangeable bonds (EB). APR, buoyed by expectations for strong earnings, also rose.
The Kosdaq lacked follow-through just like the Kospi. It closed at 841.99, down 4.72 points (0.56%) from the previous session. The index opened at 847.52, up 0.81 points (0.10%) from the previous session, but soon turned lower. Foreign investors net sold 180.7 billion won, while individuals and institutional investors net bought 190.2 billion won and 22.5 billion won, respectively.
Among top market-cap names, Alteogen, which had jumped more than 4% the previous day on expectations of a transfer listing to the main board, fell 1.72%. ECOPRO BM, Ecopro, Rainbow Robotics, LigaChem Biosciences, and Sam Chun Dang Pharm also declined.
After President Trump shared on social media (SNS) a video saying that cannabis-related ingredients should be covered by U.S. Medicare for seniors, shares of Wooree Bio, Ameridge, ICURE, and Osung Advanced Material all rose in tandem.
Lee Kyung-min, an analyst at DAISHIN SECURITIES, said, "Past cases show that government shutdowns have rarely had a major impact on financial markets, but fears of mass layoffs of public servants and delays in the release of key October employment indicators have become entangled, heightening market caution," adding, "Even so, what supported the market floor were expectations for rate cuts and liquidity."
In the Seoul foreign exchange market, the weekly transaction closing price of the won against the U.S. dollar (as of 3:30 p.m.) stood at 1,402.9 won, up 4.2 won from the previous transaction day.