Seoul Stock Market Declines Amid Growing Geopolitical Tensions; South Korean Won Falls Sharply

SEOUL - South Korean stocks experienced a significant downturn on Tuesday, with the Korea Composite Stock Price Index (KOSPI) dropping 1.12 percent to close at 2,497.59. This market slump, fueled by escalating geopolitical tensions in the Korean Peninsula, reflected a diminished interest in riskier investments. The South Korean won also witnessed a notable depreciation against the U.S. dollar.

According to Yonhap News Agency, trading volume was slightly higher than usual, with 641.9 million shares traded, valued at approximately 8.5 trillion won (US$6.4 billion). The market saw a greater number of losers (647) compared to winners (230). Institutional and foreign investors led the sell-off, disposing of 587.4 billion won worth of local shares. This selling activity offset the 585.9 billion-won purchase by individual investors.

Noh Dong-gil, an analyst at Shinhan Securities, cited the aggressive remarks made by North Korean leader Kim Jong-un as a key factor in the increased regional geopolitical risks. These comments, made during a key parliamentary meeting, included a call to revise North Korea's Constitution to identify South Korea as the primary adversary and a commitment to the complete occupation of South Korean territory in the event of a war. Additionally, ongoing military tensions in the Red Sea were mentioned as a contributor to the reduced appetite for risk.

The downturn in the Seoul stock market was evident across various sectors. Major companies like Samsung Electronics, SK hynix, Hyundai Motor, and their affiliates Kia, POSCO Holdings, and LG Chem all reported losses. However, the performance of shares in the battery, bio, and IT sectors was mixed. LG Energy Solution and Samsung Biologics saw slight increases in their stock prices, whereas Samsung SDI, POSCO Future M, and Celltrion experienced declines. The internet portal operator Naver reported a marginal gain, but Kakao, a leading mobile messenger operator, faced a significant drop.

In contrast, the state-run Korea Electric Power Corporation (KEPCO) saw a substantial increase of 2.94 percent, ending at 19,240 won.

The South Korean won closed at 1,331.80 against the U.S. dollar, a decrease of 11.6 won from the previous session’s close.

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