Financial market takes hit from Japan's widening export curbs

KOSPI and Kosdaq are displayed at the KEB Hana Bank's dealing room in central Seoul, Friday. The benchmark KOSPI closed below the 2,000 point level on the day. / Yonhap

KOSPI falls to below 2,000, won-dollar rate nears 1,200 won

By Jhoo Dong-chan

The benchmark KOSPI dipped below 2,000 points on Friday over Tokyo's decision to push ahead with its plan to remove Korea from it whitelist of countries with minimum trade restrictions.

According to the KRX, the benchmark KOSPI closed at 1,998.13, down 19.21 points, or 0.95 percent, from the previous session. This was the first time for the index to fall below the 2,000 point level since Jan. 4.

The secondary Kosdaq was down 6.56 points, or 1.05 percent, at 615.7.

The Korean won also continued losing value against the U.S. dollar. The won-dollar exchange rate rose 0.76 percent to 1,198 won on the day.

The nation's sluggish stock market was attributed to a series of bad news at home and abroad.

The Japanese Cabinet officially approved removing Korea from its so-called whitelist, a list of countries granted favorable trade treatment. Japanese Industry Minister Hiroshige Seko said the measure will go into effect Aug. 28 during a press conference after the Cabinet meeting.

Tokyo's measure is the second of its kind after it imposed export restrictions on three major resource materials for the manufacture of semiconductors and screens, July 4.

Since then, the KOSPI has fallen about 5 percent to 1,998.13 over the past month from its June 30 figure of 2,130.62. The Japanese government announced its export control measure July 1.

Shortly before Japan's announcement, U.S. President Donald Trump announced the imposition of more tariffs on $300 billion of Chinese goods.

“Trade talks are continuing, and during the talks the U.S. will start, on Sept. 1, putting a small additional tariff of 10 percent on the remaining $300 billion of products from China into our country,” he wrote on Twitter.

The Korea Center for International Finance (KCIF) said Beijing could come up with retaliatory measures against the U.S. and this could renew the trade tension between the world's two largest economies.

“Washington and Beijing are highly unlikely to reach a trade deal by the end of August,” a KCIF official said.

“We believe the U.S.-China trade row has already been reflected in the nation's economic outlook. If the tension between the two renews, however, this will raise other uncertainties in the global economy and impose downward pressure on Korea's stock and bond market.”