On the 13th, the KOSPI index gave up the 3,600 level on concerns that the U.S.-China trade dispute is reigniting. On the possibility of former U.S. President Donald Trump's "TACO Trade (trade driven by the expectation that Trump always gets scared and backs down)," the market trimmed earlier losses. Still, caution persists, analysts said.
The KOSPI index closed at 3,584.55, down 26.05 points (0.72%) from the previous session. The KOSPI opened at 3,547.56, down 63.04 points (1.75%), and fell as much as 2.44% intraday, but pared losses on hopes for eased U.S.-China tensions.
In the main bourse, foreigners and institutions sold 821.4 billion won and 447.1 billion won, respectively, while individuals bought 1.1673 trillion won. Market transaction value was in the 14 trillion won range, more than 28% lower than the previous session's 19.6 trillion won, laying bare the frozen investor sentiment.
Samsung Electronics (-1.17%) and SK hynix (-3.04%), which had led the index's gains, weakened. Hanwha Aerospace (-4.7%), KB Financial (-1.06), and Naver (NAVER) (-1.87%), other heavyweights by market cap, also closed lower. Doosan Enerbility rose more than 4% on news of its first gas turbine export.
The KOSDAQ index gained 1 point (0.12%) to 860.49 from the previous session. On the KOSDAQ market, individuals bought 117.1 billion won, while foreigners and institutions sold 102 billion won and 13.6 billion won, respectively. Top KOSDAQ market-cap stocks were mixed. ECOPRO BM (4.9%), Rainbow Robotics (4.4%), and HLB (6.35%) were strong, while Alteogen (-3.69%) and Peptron (-4.41%) were weak.
The domestic market's decline stemmed from renewed worries over a trade dispute between the United States and China. On the 10th (local time), former U.S. President Donald Trump said he would impose an additional 100% tariff on Chinese imports on top of the current tariffs starting Nov. 1, in response to China's move to tighten export controls on rare earths. The Dow fell 1.9%, and the S&P 500 and Nasdaq tumbled 2.71% and 3.56%, respectively.
Over the weekend, however, China, in a statement under the name of the Ministry of Commerce Spokesperson, said it is "not afraid but does not seek a fight," and Trump also wrote on his social media that "the highly respected President Xi Jinping only went through a brief difficult moment. The United States wants to help China," which somewhat improved investor sentiment.
Brokerages say the latest tensions are unlikely to have a major impact on financial markets. Choi Seol-hwa, an analyst at Meritz Securities, said, "In April–May, the two countries already experienced a 'tariff chicken game,'" adding, "High tariffs hurt both the United States and China more than they help, and in practical terms were merely a pressure tool for negotiations." Choi added, "This time, the situation is not much different."
Some, however, note that markets remain exposed to volatility. Lee Kyung-min, head of investment strategy at DAISHIN SECURITIES, said, "China faces the political event of the Fourth Plenary Session on the 20th, and with talks set for the end of this month, both the United States and China can engage in a war of nerves to boost bargaining power and internal unity," adding, "While a breakdown in the talks themselves is unlikely, investors should be alert to potential increases in noise."
Meanwhile, as the won-dollar exchange rate against the U.S. dollar topped 1,430 won intraday, the foreign exchange authorities stepped in verbally. The Ministry of Economy and Finance and the Bank of Korea said, "Amid expanding volatility of the won due to recent internal and external factors, we are closely monitoring the market with caution about potential one-sidedness." As of the close, the won-dollar rate was 1,426.1 won, down 0.9 won from the previous session.