Foreign currency dealers work in a dealing room of  KEB Hana Bank in Seoul. (Yonhap)
Foreign currency dealers work in a dealing room of KEB Hana Bank in Seoul. (Yonhap)

Seoul shares tumbled Monday as investors continued to reel from US President Donald Trump’s move to implement tariffs on Canada, Mexico and China over the weekend. The Korean currency also depreciated further amid the strengthening of the US greenback.

On Saturday, Trump signed an order to impose general levies of 25 percent on Canada and Mexico and 10 percent on Chinese goods, starting Tuesday, sparking commitments for retaliation from other governments.

The benchmark Kospi closed at 2,453.95 points, down 2.52 percent from the previous trading day. Most large-cap stocks declined across the board.

Foreign investors and institutions sold 870.6 billion won ($593.3 million) and 372.9 billion won worth of stocks, respectively, exceeding individuals' stock purchases valued at 1.12 trillion won.

The secondary Kosdaq shed 3.36 percent to end at 703.80 points.

Investors dumped manufacturing shares on fears that Trump's latest tariffs on Canada, Mexico and China would impact global trade dynamics and disrupt global supply chains.

Analysts have warned that the introduction of import duties by the US could drag down Korea’s exports.

NH Investment & Securities slashed its projection on the growth rate of Korean exports in 2025 from 4 percent to 3.5 percent.

“For Korean home appliance, automobile and auto parts companies operating in Mexico, US tariffs to be levied on Mexico are taking away the advantages of having a production base in Mexico, including labor and logistics costs,” said Jung Yeo-kyung, a researcher at the brokerage house.

“Korea has avoided becoming Trump's primary target, but (the Trump administration) is likely to demand a review of the trade agreement with Korea and a plan to reduce its trade deficit in the future.”

The country's leading semiconductor companies Samsung Electronics and SK hynix are facing downward pressure together over the concern of Trump’s trade war and China's low-cost, open artificial intelligence model DeepSeek, which has abruptly disrupted the AI and chips industries.

The duo constitute Kospi's two largest stocks, accounting for over 20 percent of the main bourse's market capitalization.

Shares of Samsung Electronics declined 2.67 percent to 51,000 won.

Foreign investors have recently turned a cold shoulder to their longtime favorite Korean stock Samsung, selling off some 22.8 trillion won in shares in five months dating to September last year.

Foreign ownership of Samsung’s shares dropped to 49.99 percent on Monday. It had been two years since the figure had fallen below 50 percent.

Samsung has been also beset by declining demand for semiconductors and consequent lackluster performance in the sector.

SK hynix, Samsung’s smaller rival and a key supplier to Nvidia, plunged 4.17 percent, after a sharp drop of nearly 10 percent on the previous trading day on news that DeepSeek’s new AI model could be as good as US AI rivals at a fraction of the cost.

The Korean won was pressured by a stronger dollar as fears of a global trade war were heightened by Trump's sweeping tariffs. The currency closed at 1,467.10 won against US greenback, down 0.56 percent.

On Friday, the first trading day after the Lunar New Year holidays, the currency fell by 21.4 won as external variables during the holiday, such as shock waves rippling from DeepSeek, US tariff notices and the freeze on the US Federal Reserve's base interest rate, were reflected at once.

Uncertainty surrounding Trump’s tariff campaign will likely prompt the volatility of non-US currencies in the short term, according to NH Investment & Securities Analyst Kwon Ah-min.

“But considering the US’ rising prices amid the strong dollar, there’s a possibility of (the US administration carrying out) trade negotiations rather than radical tariff actions that far exceed expectations,” she said.

By Park Han-na (hnpark@heraldcorp.com)