Posted on March 10, 2025, by Niftynews
South Korean shares saw a positive start on Monday, tracking Wall Street’s encouraging performance from the previous session. However, the market’s gains were constrained by a significant decline in steel manufacturers, including POSCO Holdings and Hyundai Steel, which weighed on the overall market sentiment. The KOSPI, South Korea’s benchmark index, rose by 0.45%, reaching 2,574.89 as of 0108 GMT. Despite the positive momentum from various sectors, the steel sector’s performance acted as a drag on the market’s broader gains.
Performance Breakdown:
The South Korean market found itself supported by positive movement in tech and automotive sectors, but heavy losses in steel stocks restricted overall performance. Here’s a detailed look at the key contributors to the day’s market performance:
Steel Sector Drag:
The primary setback came from steel manufacturers, which have faced significant challenges following a new round of steel tariffs imposed by the United States. POSCO Holdings, one of the country’s largest steelmakers, saw its shares fall by 4.4%, while Hyundai Steel suffered a sharp 7.2% decline. These losses were attributed to comments made by U.S. Commerce Secretary Howard Lutnick, who confirmed that steel tariffs would be implemented as scheduled on Wednesday, March 12, 2025.
Steel companies had been hoping for a delay or revision of the tariffs, but the confirmation of their immediate implementation led to panic selling in the sector. As a result, the sharp declines in POSCO and Hyundai Steel overshadowed the broader market’s positive trends, contributing to an overall limited gain for South Korean shares on the day.
Tech Sector’s Contribution:
On a more positive note, tech stocks were among the top performers. Samsung Electronics, one of the world’s largest chipmakers, rose by 1.12%, buoyed by investor optimism surrounding the company’s upcoming product releases and growth potential in the global tech market. Despite the overall strength in tech stocks, SK Hynix, another major chipmaker, faced a slight decline of 1.61%. This divergence in the performance of the two major chipmakers underlined the mixed sentiment among investors about the semiconductor market.
The battery sector also contributed positively to the market’s upward movement, with LG Energy Solution climbing by 0.88%. The company’s focus on energy storage systems and expanding global market share in the electric vehicle (EV) battery sector continues to attract investor interest, helping to counterbalance losses in other sectors like steel.
Automotive Stocks Rise:
The automobile sector performed relatively well, with Hyundai Motor adding 0.41% to its stock price and Kia Corp. climbing 0.93%. Both companies have been benefiting from strong domestic and international sales, particularly in the electric vehicle space, where they are seeing increased demand. As global consumers increasingly shift towards eco-friendly vehicles, the outlook for South Korean automakers looks promising, which helped boost investor sentiment towards the sector.
Positive Movement in Tech and Communication:
In the communication sector, Naver, the leading South Korean search engine, saw its stock rise by 1.17%, while its rival, Kakao, surged by 2.63%. These increases reflect growing confidence in South Korea’s digital economy, especially as consumers continue to embrace mobile apps and digital platforms for everything from e-commerce to communication.
Market Sentiment and Foreign Selling:
Despite the gains in tech, automotive, and some communication stocks, the market faced challenges from foreign investors. On Monday, foreigners were net sellers, offloading 230.4 billion won worth of South Korean shares. This marked a continuation of the outflows seen in the previous weeks, which have contributed to the volatility in the local stock market. The reluctance of foreign investors to buy into the market despite the positive movements in certain sectors points to broader concerns about the global economy and the ongoing uncertainties in international trade.
Foreign Selling and Market Liquidity:
Of the 936 stocks traded on Monday, 368 shares advanced, while 516 declined. The foreign selling pressure weighed on the overall sentiment, particularly as local investors seemed hesitant to step in aggressively in the absence of broader market leadership from major sectors like steel.
This trend of foreign selling has been a concern for South Korea’s stock market, as it indicates that investors are cautious about the country’s economic outlook, which remains influenced by global trade dynamics, inflation concerns, and local sectoral challenges, such as the ongoing issues faced by the steel industry.
Currency Movements:
Meanwhile, the Korean won strengthened against the U.S. dollar, trading at 1,445.7 per dollar, up by 0.26% from the previous close. The won’s performance was seen as a sign of stability in South Korea’s currency markets, despite the overall mixed sentiment in the stock market. However, the exchange rate remains volatile, with the global economic outlook and geopolitical tensions continuing to influence currency movements.
Bond Market and Treasury Yields:
In the bond market, March futures on three-year treasury bonds fell by 0.05 points to 106.75. The benchmark 10-year yield saw a slight decrease of 1.7 basis points to 2.775%. This reflects a cautious approach by bond investors, who are likely to be hedging against potential volatility in the equity markets, particularly with the uncertainty surrounding steel tariffs and the broader global trade environment.
The movements in the bond market indicate that investors are closely monitoring developments in both the domestic and international economic landscape. Any signs of a slowdown in global growth or worsening trade relations could prompt further shifts in bond market strategies.
Outlook for South Korean Market:
Looking ahead, the outlook for South Korean shares appears mixed, with strong performances in tech and automobile sectors, but challenges in the steel sector due to U.S. tariffs. Investors will likely be cautious as they wait for further clarity on trade relations and the potential for a rebound in steel prices. Additionally, foreign investors’ continued selling pressure could weigh on the market in the short term, especially if key sectors such as steel and chips face headwinds.
The coming weeks will be crucial for South Korea’s stock market as it navigates through global economic pressures, local sector performance, and investor sentiment. The KOSPI’s ability to sustain gains will depend on how well the domestic economy adapts to international trade dynamics and the resilience of sectors such as technology, automotive, and digital services.
