April 20, 2024

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South Korean bourses, especially the tech-heavy Kosdaq, suffered big losses in July as investor sentiment was hit by the deteriorating global market conditions marked by trade wars between major economies.

The Kosdaq lost 8.74 percent, or 60.35 points, recording the biggest monthly loss since October last year. It experienced a 4 percent plunge on July 29 as foreign and individual investors altogether turned net sellers.

Analysts said investors dumped semiconductor-related stocks amid the ongoing trade dispute between Korea and Japan.

On July 4, Japan imposed export restrictions on Korea for three key materials crucial for the production of semiconductors and displays, in apparent response to Seoul’s handling of a wartime forced labor issue.

Japan is now expected to remove Korea from its whitelist of nations that enjoy minimum trade restrictions on Aug. 2. 

On July 27, US President Donald Trump’s criticism on China’s status as a developing country which allows it preferential treatment by the World Trade Organization also dampened expectations that the trade row between the world’s two largest economies will resolve any time soon.

Jung Hun-seog, an analyst with Korea Investment and Securities, said that in addition to the trade wars, fundamental valuation issues have also hurt bio-related stocks.

“Investors are shunning the bio stocks, which form the core of Kodaq, following a series of scandals including the cancellation of the gene therapy drug Invossa,” he said, adding that it’s hard to predict when the economy will pick up.

Meritz Securities analyst Ha In-hwan said, “It’s a combination of various issues, so it’s difficult to know when the Kosdaq will rebound.”

Meanwhile, the main Kospi index lost 4.98 percent in July. On July 31, it shed 14.13 points or 0.69 percent, to end at 2,024.55.



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