Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Have market uncertainties eased enough for stocks to rebound?
A trading board at a Hana Bank dealing room in Seoul shows the benchmark KOSPI fell 21.28 points to 2,465.42 points, Friday. Yonhap
By Yi Whan-woo
Adverse effect from US tariff rate overshadows eased domestic political uncertainty
Uncertainties remain about whether the Korean stock market can rebound this year, even after two major hurdles hindering the market’s recovery have fully materialized, allowing investors to take corresponding countermeasures, according to analysts on Friday.
The two hurdles are U.S. President Donald Trump’s tariff policy and the Constitutional Court’s ruling to impeach President Yoon Suk Yeol.
The U.S. government announced it would impose a 25 percent reciprocal tariff on imports from Korea, Wednesday (local time), in a specific measure taken in line with Trump’s threat to start a trade war after he was elected in November 2024.
In Seoul, the Constitutional Court removed Yoon from office, Friday, four months after his ill-fated martial law decree that threw domestic politics into turmoil and unnerved financial markets.
Under the circumstances, the benchmark KOSPI sank 21.28 points, or 0.86 percent, to close at 2465.42 points, Friday, extending its losing streak to a third session.
It started at 2,450.49 points, down 36.21 points from Thursday’s close, and went as low as 2,438.02 points during intraday trading before picking up pace slightly.
Analysts assessed that, while the Constitutional Court’s ruling cleared up market uncertainties to some extent, its positive impact is overshadowed by the shock from the U.S. tariff policy.
“The market of course was bracing for a blow from Trump’s unpredictable trade policy,” Hwang San-hae, a researcher at LS Securities, said. “But even so, the tariff rate was far higher than the 10 percent level that was considered adequate for the market.”
The analyst pointed out that the tariff policy will take effect next Wednesday and will “continue to rattle the domestic stock market before and afterward.”
Huh Jae-hwan an analyst at Eugene Investment & Securities, voiced a similar view. “The tariff policy is likely to haunt the market here for the next several months,” he said.
He also referred to major listed companies that profit from exports, noting that they are likely to struggle with their earnings in the second quarter.
Of the large caps, chipmaker Samsung Electronics lost 2.6 percent and its cross-town rival SK hynix sank 6.37 percent.
Carmaker Hyundai Motor retreated 1.03 percent, while its sister company Kia also fell 1.21 percent.
Asked when the KOSPI may enter a recovery phase, Huh forecast that the “slowdown on economic growth may worsen to reach a level comparable to a recession through the third quarter.”
At the end of 2024, multiple analysts forecast that the KOSPI could face a bearish outlook during the first few months of 2025, but that it would be expected to rebound once the uncertainties linked to U.S. tariffs and Yoon’s ruling were settled.