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Korean markets tumble on US-China trade tensions

South Korean markets were rattled Thursday, along with other markets in the region, after US President Donald Trump claimed that Beijing “broke the deal” in the ongoing trade talks with Washington.

Trump’s remarks made at a rally in Florida early in the day, dragged down major indexes by further dampening investor sentiments. 

Korea’s main bourse Kospi closed at 2,159.79, 66 points or 3.04 percent lower from the previous session. The secondary Kosdaq also slipped 21.15 points or 2.84 percent to 724.22, despite opening higher from the previous trading. 

US President Donald Trump speaks during a rally at the Aaron Bessant Amphitheater on May 9, 2019 in Panama City Beach, Florida. (AFP-Yonhap)
US President Donald Trump speaks during a rally at the Aaron Bessant Amphitheater on May 9, 2019 in Panama City Beach, Florida. (AFP-Yonhap)

Other major indexes in Asia, such as the Shanghai composite and Hong Kong’s Hang Seng Index shed 0.41 percent and 0.42 percent, respectively, around 10:30 a.m. Japan’s Nikkei 225 was also down by 0.86 percent in the same time period.

“The fact that the US stock market ended lower due to uncertainties surrounding the Washington-Beijing trade talks negatively affected the Korean market,” said Seo Sang-young, an analyst at Kiwoom Securities.

The Dow Jones Industrial Average slid 66.47 points or 0.3 percent, after being down almost 500 points earlier in the session. The Nasdaq retreated 0.5 percent and the S&P 500 declined 0.5 percent.

“US chipmaker Microchip Technology’s first-quarter guidance that missed estimates over projections of lackluster semiconductor sales in the second half of the year coupled with Intel CEO Bob Swan’s latest comments doubting profitability of the market are expected to burden the Korean semiconductor sector,” Seo added. 

The stock price of Korea’s No. 2 chipmaker, SK hynix, dropped 5.35 percent from the previous session to 76,000 won ($64.35).

But the uncertainties surrounding US-China trade talks are expected to be lifted by the end of the week, Seo said, referring to the results of talks between the top officials of both countries in Washington on Friday (local time).

Meanwhile, as a gloomy mood continues to loom over the nation’s key bourses, new data showed Thursday that the Kospi has slid more than 5 percent during the first two years of the Moon Jae-in administration.

As of Wednesday’s closing, the Kospi had overall dropped 5.44 percent from 2,292.76 points on May 8, 2017, the last trading day before President Moon’s inauguration.

The figure marks Kospi’s worst performance to date during the first two years of presidency of the nation’s leaders so far, since the launch of the main bourse in 1983.

In contrast, the second-tier, tech-heavy Kosdaq has gained 15.85 percent during the same period on the government’s efforts to bolster the nation’s technology sectors with support for 5G networks and plans for the “fourth industrial revolution.”