Refer Report

Despite the rise in global stock markets, including the U.S.,
KOSPI 2500 line collapse, etc. ‘stumbling’
The closing price of the won-dollar exchange rate exceeded 1,400 won.

Trump’s ‘America First’ pledge
‘Blow’ to an economy highly dependent on external sources

Although the U.S. stock market continues to rise every day after former U.S. President Donald Trump’s re-election, domestic stock markets are falling and are being left out of the ‘Trump rally’. This is believed to be due to stronger selling by foreigners and institutions due to concerns that the Korean economy will suffer a significant blow if President-elect Trump’s ‘America First’ pledge is realized.

On the 12th, KOSPI closed at 2482.57, down 1.94% from the previous day, and KOSDAQ closed at 710.52, down 2.51% from the previous day. This is the first time since ‘Black Monday’ in August that the KOSPI index fell below the 2,500 level. Compared to August 1st (2777.68), right before Black Monday, it fell by 10.62%.

This is a trend that runs counter to the fact that all three major U.S. stock indices, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite Index, closed at record highs on the 11th (local time). On the New York Stock Exchange, the Dow ended trading at 44293.13, up 0.69% from the previous trading session, exceeding the 44,000 mark for the first time.

There have been previous predictions that former President Trump’s election would lead to a ‘decoupling’ phenomenon in the returns of the U.S. and non-U.S. stock markets, but the decline in the domestic stock market is particularly noticeable compared to other countries. Japan’s Nikkei Stock Average rose 2.61% on the 6th, and China’s Shanghai Composite Index rose 2.57% on the 7th, showing a weak trend.

Experts explain that the reason the domestic stock market is reeling from the ‘Trump shock’ is because of the domestic economic structure that is overly dependent on exports and imports. Park Seok-hyun, a researcher at Woori Bank, said, “The election of Trump, who pledged to strengthen tariffs, has caused fluctuations in the stock markets of countries other than the U.S., but the reason why Korea is taking a particularly big hit is because of the world’s highest level of foreign dependence,” adding, “Trump pledged to cut subsidies.” “The fact that the semiconductor and battery industries account for a large proportion of the domestic stock market capitalization also had an impact,” he analyzed. Among the top stocks in market capitalization on this day, Samsung Electronics (-3.64%) fell to 53,000 won, recording the lowest price in 4 years and 4 months, and SK Hynix (-3.53%) also fell significantly.

This also appeared in the exchange rate. As of 3:30 p.m. on this day, the won-dollar exchange rate in the Seoul foreign exchange market closed at 1,403.5 won, up 8.8 won from the previous day. Based on the closing price of weekly trading, this is the first time since November 7, 2022 that it exceeded 1,400 won. Min Kyung-won, a researcher at Woori Bank, said, “As the Trump trade continues every day, the strength of the dollar is affecting the overall foreign exchange market.”

After Trump’s election, prices of virtual assets, including Bitcoin, soared, and domestic virtual asset trading volume overwhelmed the KOSPI and KOSDAQ markets. According to CoinMarketCap, a virtual asset information site, on this day, the total trading volume of the five major domestic virtual asset exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax) over the past 24 hours was 21.5823 trillion won, exceeding the previous day’s trading volume in the KOSPI and KOSDAQ markets. It was more than 3 trillion won more than the total amount of 18.2135 trillion won.

Source: Korean