April 20, 2024

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[THE INVESTOR] The South Korean stock market got a fillip on April 17 following eased market concerns over the latest US currency report and North Korean risks.

The benchmark KOSPI closed up 0.51 percent, or 10.88 points, to 2,145.76 points on April 17, while the tech-heavy KOSDAQ rose 1.82 percent, or 11.23 points, to 629.47 points. 

“Last week, KOSPI fell as low as 2,120 points amid looming concerns over the North Korean risk and possible designation as a currency manipulator by the US. But that concerns were cleared with the latest US currency report,” said KB Securities analyst Bae Sung-young

In its semi-annual report the US Treasury Department placed Korea, China, Japan, Taiwan, Germany and Switzerland on its watch list. Analysts had warned US President Donald Trump’s tough stance on China might result in naming the world’s second-largest economy as a currency manipulator by altering its standards. In such case, South Korea would also have been likely named as a currency manipulator.

Lee Kyoung-min, an analyst at Daishin Securities said that “North Korean risks that peaked before the birthday of Kim Il-sung (which falls on April 15) were also relieved as its missile test failed.”

The analyst, however, warned that foreign investors, who were net-buyers in the first quarter, boosting the stock market, might get adverse.

“There is still a possibility that exchange rate volatility will increase considering Trump’s strong commitment to protectionism and foreigners could sell Korean stocks on profit-taking,” Lee said.

Overseas investors remained net-sellers on the KOSPI on April 17 for the third consecutive trade day. But they became net-buyers on the secondary KOSDAQ bourse.

On the same day, the Korean won closed at 1,137.20 against the US dollar, 0.42 percent higher than the previous session.

By Park Ga-young(gypark@heraldcorp.com)