Kospi slips below 2,300 as US tariffs take toll
The South Korean benchmark Kospi sank below the 2,300 threshold for the first time in 17 months, taking a blow from the angst surrounding the US "reciprocal tariffs." Coupled with the stock market's slump, the value of the Korean won per dollar further weakened past 1,480 won.
As the US government's 25 percent reciprocal tariffs on Korean goods took effect Wednesday as previously scheduled, the Kospi stood at 2290.69 as of 2:30 p.m., down 44.52 points or 1.91 percent from the previous session. It was the first time the Kospi had dropped below the 2,300 mark since hitting 2,288.64 on Nov. 1, 2023.
The index kicked off trading at the opening bell at 2,329.99, but losses deepened through the session, and it dipped to as low as 2,289.07.
The plunge comes two days after a sidecar — a five-minute halt on program trading — was activated on Kospi 200 futures on Monday, as the benchmark fell below 2,400.
With the bearish market, market bellwethers Samsung Electronics traded at 53,300 won, down 0.37 percent, while SK hynix stood at 163,300 won, down 3.66 percent as of 2:30 p.m.
Foreign investors dumped roughly 845 billion won on the Kospi as of 2:30 p.m. Institutional investors deepened the market's loss by net selling 108 billion won. Retail investors were the sole buyers, racking in 850 billion won.
The secondary bourse Kosdaq stood at 639.25 as of 2:30 p.m., down 19.2 points or 2.92 percent from the previous session. It was the first time for the Kosdaq to drop below the 650 threshold during intraday trading since December.
Other stock markets in Asia were also deep in the red. Japan's benchmark Nikkei tumbled 4.4 percent, while the Taiwanese Taiex fell by 5.8 percent and Hong Kong's Hang Seng fell by 1.6 percent. Only China's Shanghai Composite Stock Market Index marked a slight gain of 0.2 percent as of press time.
Foreign investors' selling spree on the stock market also pulled down the local won's value per dollar.
The Korean won's value per dollar reached 1,487.3 won during daytime trading Wednesday, weakening to its worst since hitting 1,492 won on March 16, 2009. The won's value per dollar stood at 1,484.53 as of 2:30 p.m.
The won's depreciation also results from the devaluation of the Chinese yuan as the local currency is treated as the yuan's proxy. The offshore yuan fell to its weakest level on record after China eased its tight grip on the currency in an attempt to offset the blow to exports amid the intensified trade war.
'If the US-China currency war intensifies and the Chinese yuan further weakens, the won-per-dollar rate is more likely to surpass the 1,500 won threshold,' iM Securities analyst Park Sang-hyun said.
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