Kospi pares early losses but still closes down after Trump tariff announcement

Seoul shares closed lower on Thursday, but pared some earlier losses in the afternoon after opening sharply lower in the wake of U.S. President Donald Trump’s aggressive “reciprocal” tariffs announcement overnight.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,486.70 points on April 3, down 19.16 points, or 0.76 percent, from the previous trading session. [YONHAP]

Seoul shares closed lower on Thursday but pared some earlier losses in the afternoon after opening sharply lower in the wake of U.S. President Donald Trump’s aggressive “reciprocal” tariffsannouncement overnight.

Retail investors and institutions mitigated foreigner-led selling amid a continued shift toward safe-haven assets, which was further fueled by the Constitutional Court’s impending verdict on President Yoon Suk Yeol.

The local currency’s value also fell against the dollar, but the extent of the depreciation notably moderated throughout the day.

The Kospi closed at 2,486.70 points on Thursday, down 19.16 points, or 0.76 percent, from the previous session. It was the first time since Monday that the benchmark index ended below the 2,500 threshold.

As Washington announced sweeping tariff duties at 5 a.m. in Korea, the Kospi fell as low as 2,437.42 right after the market opening but trimmed some of the losses in the afternoon.

Foreigners net sold shares worth a whopping 1.38 trillion won on the main bourse, but institutions picked up 461 billion won and retail investors 795.1 billion won, helping cushion the drop.

Losers outnumbered gainers by 609 to 277.

Asian stock market indices are shown on an electronic board in Hana Bank's trading room in central Seoul on April 3, following Donald Trump's announcement of ″reciprocal tariffs.″ [NEWS1]

“The Korean stock market remained relatively resilient despite concerns, as bargain hunting helped mitigate the decline even though foreign capital outflow continued following the higher-than-expected tariff rates,” said Lee Jae-won, analyst at Shinhan Securities.

“While a temporary shock wave will be inevitable for the global financial markets, including Korea, the stock market has already been adjusting to reflect the tariff issues,” noted Kim Ji-won, a KB Securities analyst.

“The consensus view is that the market has passed its near-term bottom.”

Kim suggested that the performance will continue to diverge between sectors based on what comes out of the negotiation from now on. The upcoming verdict on Yoon on Friday will also likely fuel market volatility, the analyst added.

Most large caps fell, with Samsung Electronics sliding 2.04 percent to 57,600 won ($39.51) and SK hynix falling 1.67 percent to 194,600 won.

Hyundai Motor retreated 1.27 percent to 193,800 won, and Kia lost 1.41 percent to 90,800 won.

Battery maker LG Energy Solution dropped 4.26 percent to 315,000 won.

Financial stocks, which have relatively high proportions of foreigners in their shareholder compositions, also took a dip.

KB Financial Group dipped 4.22 percent to 77,100 won, and Shinhan Financial Group fell 2.36 percent to 47,550 won.

On the other hand, stocks expected to benefit from Trump’s policies, such as biopharmaceuticals and defense, shot up.

As pharmaceuticals are exempt from the latest reciprocal tariffs, Samsung Biologics surged 6 percent to 194,600 won, and Celltrion rose 2.24 percent to 173,500 won.

Hanwha Aerospace climbed 5.13 percent to 697,000 won, and Hyundai Rotem gained 1.72 percent to 100,700 won.

The local currency was trading at 1,467 won against the greenback at 3:30 p.m., up 0.4 won from the previous session. The won’s depreciation was significantly sharper earlier that day, with the won-dollar exchange rate briefly surging as high as 1,472.5 before moderating as the dollar depreciated due to rising skepticism over U.S. growth.

Bond prices, which move inversely to yields, ended higher. The yield on three-year government bonds fell 6.1 basis points to 2.523 percent, and the return on the benchmark 10-year U.S. government bonds dropped 5.0 basis points to 4.124 percent.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]