Stock prices in Seoul reach close to a four-year peak, disregarding Donald Trump's reinstated tariff warnings.
In the financial world, the Kospi index, South Korea's primary stock market index, experienced a significant boost on a day when U.S. trade talks were extended to August. The report of the Kospi's closing price on July 9 was made by YONHAP, with the index closing at 3,133.74, marking a 0.6 percent increase from the previous trading day.
The positive impact on the Kospi's price was due to the extension of U.S. trade talks. Despite the initial dip in the opening price on July 9, caused by Trump's tariff announcement on copper and medicine, the market soon recovered, demonstrating a resilience that has become characteristic of the Kospi.
This uptick in the Kospi's price was not a one-off event. In early July 2025, the index hit new highs, with optimism fueled by domestic policy reforms, despite ongoing foreign investor outflows triggered by U.S. trade tariff concerns. The strong support from domestic retail investors, who net bought significant amounts of stock amid expectations of corporate share buyback policies, played a crucial role in the index's steady climb.
However, analysts have cautioned that while the first half of 2025 saw the Kospi surge 27%, its best 1H performance in 26 years, risks of a market correction are present, particularly if third-quarter earnings fall short due to weakening external demand linked in part to trade frictions.
The extended U.S. trade talks have introduced a period of heightened uncertainty and volatility related to tariff issues. However, the Kospi index has shown remarkable resilience, a testament to the strength of the South Korean economy and the confidence of its domestic investors.
In addition to the Kospi's performance, the FX market volume in Korea increased by 16.3% in the first year of extended trading hours, reflecting the increased interest and activity in the South Korean financial market.
In conclusion, while U.S. trade talks and tariff announcements have introduced short-term uncertainty and foreign selling pressure on the Kospi index, the index has managed to hold its gains and even reach new highs, thanks to strong domestic investor optimism and policy reform expectations. The market impact has been a mixed dynamic of external risk offset by internal support during this period.
The extension of U.S. trade talks influenced the Kospi's price increase, showing the index's resilience. In early 2025, domestic policy reforms and strong support from domestic retail investors led the index to hit new highs, despite foreign investor outflows. However, analysts warned of potential market corrections in the third quarter due to weakening external demand linked to trade frictions. Despite this, the FX market volume in Korea increased significantly, indicating increased interest and activity in the South Korean financial market.
