South Korean stock markets rebounded slightly Tuesday after getting off to a weak start, amid signs of escalating tensions between the US and China in a trade war.
The nation’s main bourse Kospi closed 0.12 percent higher than the previous trading, at 2,081.59. It had recovered on the back of institutional buying after opening 0.9 percent lower than the previous close at 2060.24.
The secondary tech-heavy Kosdaq ended 0.24 percent higher at 710.49, having gained throughout the day after opening 1.4 percent lower than the previous close at 698.86.
Institutional investors net purchased 336.5 billion won ($283.1 million) worth of shares on the main bourse, while foreigners net sold stocks worth 285.1 billion won.
(Yonhap)
Overall, markets were affected by dampened investor sentiment as fresh US-China tariff war volleys pressured both the US and Asian markets.
Tuesday’s rebound, however, came on the back of slightly improved sentiment after US President Donald Trump said earlier in the day that he had a feeling the trade talks were “going to be very successful.”
But analysts expect the mood of uncertainty surrounding the trade talks to linger and to continue to weigh down the market.
“The US-China trade talks, which were expected to wrap up by the end of May, have entered yet another stage of uncertainty,” said Lee Ye-shin, an analyst at Shinhan Investment.
“This resulted in dampened investor sentiment and a need for alertness to the possible expansion of market volatility,” she added.
China announced Monday that it will raise tariffs on $60 billion worth of US goods, beginning June 1, a week after Trump raised duties on $200 billion of Chinese goods to 25 percent from 10 percent.
The news pulled down the US stock market, as the Dow Jones Industrial Average fell 2.38 percent to 25,324.99, the S&P 500 lost 2.41 percent to 2,811.87 and the Nasdaq Composite dropped 3.41 percent to 7,647.02.
Meanwhile, the nation’s main bourse operator, the Korea Exchange, held an emergency meeting early in the day to deal with the possibility of a dramatic increase in market volatility, as the global stock market continues to be rattled by escalating US-China trade war tensions.
It vowed to launch a task force should market sentiment worsen and to cooperate with financial authorities to create a stable environment.
However, experts say stocks are unlikely to plummet below the psychologically important 2,000-point level, with hopes that the upcoming talks between Trump and his Chinese counterpart, Xi Jinping, at next month’s G-20 summit will resolve trade tensions.
“The tension was expected after the tariff war between the two nations, and it is too early to say that the deal will further sour,” said Cho Yeon-ju, an analyst at NH Investment & Securities.
(mkjung@heraldcorp.com)
