Resurfacing Political Risks... KOSPI Falls, Exchange Rate Surpasses 1460 Won

KOSDAQ Also 'Falls'

"If Political Uncertainty Grows, Exchange Rate Could Surpass 1500 Won"

The KOSPI and KOSDAQ indices, which started with gains, ended lower. It is interpreted that investment sentiment has been dampened due to increasing political turmoil, such as the Democratic Party of Korea's proposal of an impeachment bill against Acting President Han Duck-soo, and the rise in the USD/KRW exchange rate (weakening of the won).

On the 26th, the KOSPI closed at 2429.67, down 10.85 points (0.44%) from the previous trading day. The index started trading at the 2449 level but turned downward in the afternoon, closing at the 2430 level. The KOSPI has fallen for two consecutive trading days. Both trading volume and value decreased compared to the previous trading day.

In the stock market, individuals alone net sold 2.498 trillion won. Institutions and foreigners net bought 1.237 trillion won and 171 billion won, respectively. Other corporations also showed a buying advantage of 1.096 trillion won.

Political uncertainty seems to have negatively affected investment sentiment. Acting President Han Duck-soo postponed the appointment of a Constitutional Court judge. Consequently, the Democratic Party of Korea reported an impeachment bill against Acting President Han to the National Assembly's plenary session. The vote is expected to take place on the 27th.

There is still controversy over the quorum for Acting President Han's impeachment. The impeachment of a Prime Minister or other cabinet members is passed with the approval of a majority (151 members) of the National Assembly. In contrast, the impeachment of a president requires the consent of more than two-thirds (200 members) of the assembly.

Most of the top stocks by market capitalization on the KOSPI fell. POSCO Holdings (-1.92%), LG Energy Solution (-1.57%), Celltrion (-1.49%), Samsung Electronics (-1.47%), NAVER (-1.28%), KB Financial Group (-1.16%), Shinhan Financial Group (-1.01%), and Hyundai Mobis (-0.41%) all turned on the blue light.

On the other hand, shipbuilding stocks are continuing their rally, with HD Hyundai Heavy Industries (9.56%) hitting an all-time high. It is known that government officials, including the Deputy Minister of India's Ministry of Ports, Shipping and Waterways, visited Hanwha Ocean (4.86%), Samsung Heavy Industries (2.11%), and HD Hyundai Heavy Industries to explore cooperation for fostering India's shipbuilding industry. Also, President-elect Donald Trump of the United States has requested cooperation in the ship maintenance, repair, and overhaul (MRO) business, and the 'love calls' from various countries to the Korean shipbuilding industry are unending.

The KOSDAQ index closed at 675.64, down 4.47 points (0.66%) from the previous trading day. The KOSDAQ index also started with gains but expanded its decline in the afternoon, losing the 680 level.

In the KOSDAQ market, individuals and foreigners net sold 1.352 trillion won and 193 billion won, respectively. Institutions net bought 1.6 trillion won.

Most of the top stocks by market capitalization on the KOSDAQ also fell. Enchem (-6.17%), EcoPro BM (-4.68%), EcoPro (-4.55%), Classys (-3.59%), L&K Engineering (-2.55%), PharmaResearch (-1.5%), Rainbow Robotics (-1.37%), HLB (-1.05%), and Celltrion Pharm (-0.96%) all declined. On the other hand, the superconducting theme stock Shinsung Delta Tech surged 19.31%, climbing to 8th place in KOSDAQ market capitalization.

As of 3:30 PM, the USD/KRW exchange rate recorded 1465 won, up 7.5 won from the previous session. This is the highest level since the 2009 financial crisis. The exchange rate has risen for eight consecutive trading days. The value of the dollar soared after President-elect Donald Trump's election victory. Also, the state of emergency has increased anxiety about the financial market, causing the value of the won to fall.

Park Sang-hyun, a researcher at iM Investment & Securities, explained, "If the uncertainty of the impeachment situation increases, the exchange rate could reach the 1500 won level," adding, "The growing concern about the domestic economy is also negatively affecting the exchange rate."

Jin Young-ki, Hankyung.com reporter young71@hankyung.com