What impact will Donald Trump's U.S Presidency have on Korean Stock Market?
South Korea is one of emerging countries which Trump mentioned several times during his recent speeches ranked 4th among Asian countries interms of nominal GDP. Generally speaking, those countries have been experiencing large forex outflows due to 2016 DEC U.S. Feds' Interest rate hike and Trumps' new policies announcements.
Investors around the world had noticed that Trump's policies are likely to be unfavorable for South Korean Economy. The value of Won, Korean Currency, has been dropped by 4% relative to USD since the 2016 Nov U.S Election.
The Two Main Indexes in Korea are KOSPI and KOSDAQ. KOSPI index is generally known as a group of major firms which includes samsung and hyundai While KOSDAQ index includes relatively small size cap companies and majority of them are involved in bio/pharmaceutical/semiconductor related industries similar to NASDAQ.
Both KOSPI and KOSDAQ had been dropped hugely since 2016 October due to the fact that the most of investors around the world had predicted U.S Fed would raise the FED FUNDS RATE in DEC 2016.
It was a serious matter for Korean Economy because the interest rate gap between Korea and U.S has reached 0.50% from Dec 2016. More captial outflows is likely to occur as the gap between the countries narrowed because USD based Securities and Bonds are safer assets relative to the Won based obviously.
However you may have noticed that KOSPI index performed better than expected as you can see from the above graph. It is mainly because Samsungs' stock has been experiencing the record high price even thought the company has been through tough periods recently including the failure of Galaxy Note7 & Vice Chairman Lee, jae yong has been prosecuted without detention due to bribery charges.
(source: Kiwoom)
Samsung Electronics consists of approx. 20% of KOSPI Index
If the material was helpful
please subscribe this page and press the heart button below which means you like this content.
Thank you for your interest
I will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and so on.
Please be fully informed
the content contains personal opinions and that you are responsible for your investment.
Please check the information on the relevant website before making any further steps for your investment decision.
