Seoul stocks fall despite tariff deal with US

Electronic signboards at Hana Bank in Seoul show the benchmark KOSPI closing at 3,245.44, Thursday, down 0.28 percent from the previous trading day. The secondary Kosdaq gained 0.20 percent to close at 805.24. Yonhap

Seoul stocks declined Thursday despite the announcement of a long-awaited tariff deal with the U.S. Analysts say expectations for the deal had already been priced into the market, and the outcome failed to exceed those expectations.

According to the Korea Exchange, the benchmark KOSPI closed at 3,245.44, down 0.28 percent from the previous session. It marked the first decline in seven trading days.

Although news about the tariffs briefly pushed the index to an intraday high of 3,288, the rally quickly lost momentum as investors shifted to selling.

Institutional investors offloaded shares worth 705.4 billion won ($508 million), while individual and foreign investors purchased shares totaling 223.7 billion won and 344.9 billion won, respectively.

The secondary Kosdaq ended the session at 805.24, up 0.20 percent from the previous trading day.

"The market had already priced in hopes of a deal, which had driven gains in key export-oriented sectors," said Seo Sang-young, an analyst at Mirae Asset Securities. "The latest tariff measures and their potential negative impact on Korea's trade balance warrant close attention."

Automakers were among the hardest hit. Shares of Hyundai Motor and Kia fell 4.48 percent and 7.34 percent, respectively, amid growing concerns that Korea's auto export competitiveness may weaken.

Although auto tariffs were lowered from 25 to 15 percent, the preferential tariff advantage Korea enjoyed under the Korea-U.S. Free Trade Agreement prior to the Trump administration has effectively disappeared. Korean automakers now face equal competition with Japanese and EU manufacturers.

Shipbuilders saw the biggest gains of the day. Shares of HD Hyundai Heavy Industries and Hanwha Ocean surged 4.14 percent and 13.43 percent, respectively, following reports that $150 billion of a $350 billion investment fund will be allocated to shipbuilding collaboration.

Meanwhile, news that future semiconductor tariffs will not disadvantage Korea boosted SK hynix shares, which rose 3.8 percent. Yet, Samsung Electronics shares declined 1.65 percent after reporting its lowest operating profit in the semiconductor segment in six quarters.

Securities analysts noted that the investment climate has stabilized, largely because the worst-case scenario of a 25 percent tariff on Korean products was avoided.

"This development may provide short-term support for the stock market," Seo said. "However, sustained momentum will likely depend more on corporate earnings and major U.S. economic data."