The Korean stock market was impacted by the intensifying geopolitical tensions between the US and Iran, with negative repercussions expected to continue, according to analysts Monday.
Seoul’s benchmark bourse Kospi opened sharply low -- down 21.49 points, or 0.99 percent, from the previous session. The weak start continued through the day and it closed at 2,155.07. The tech-heavy Kosdaq also slipped 14.62 points, or 2.18 percent, to 655.31.
Most large caps in the local market were in negative terrain. Shares of Samsung Electronics were flat, closing at 55,500 won ($47.40). SK hynix, the second-largest memory chipmaker, closed at 94,300 won, tumbling 0.21 percent.
Other major indexes in Asia, such as the Shanghai composite and Hong Kong’s Hang Seng Index shed 0.35 percent and 1.11 percent, respectively, as of 3:23 p.m. Monday. Japan’s Nikkei 225 was also down 1.91 percent at 3:15 p.m.
Major stock market indexes followed heavy losses on Wall Street on Friday when a top Iranian military general was killed by a US drone strike in Baghdad, sparking tensions in one of the world’s largest crude oil-producing regions.
The Dow Jones Industrial Average slid 233.92 points, or 0.81 percent, closing at 28,634.88 on Friday. The Nasdaq retreated 0.79 percent and the S&P 500 declined 0.71 percent on the same day.
“Kospi was going to reach a high point in the first quarter then show downturn from the third quarter this year, due to economic slowdown and the US presidential election. However, the US-Iran conflict is likely to cause an earlier adjustment in the stock market,” said Seo Sang-young, an analyst at Kiwoom Securities.
He predicted that uncertainties between the two countries’ relations may be extended, which will affect the local stock market and oil prices. The Kospi index may fall below the brokerage firm’s previous outlook -- lower than the trading band of 1,900-2,250 points.
The Korean won closed at 1,172.1 won against the US dollar, weakening 5 won from the previous session’s close. Meanwhile, analysts predicted that the local currency will come under selling pressure next week due to negative sentiments caused the US-Iran tensions.
“If Iran blocks the Strait of Hormuz, international oil prices may surge 10 percent, which will lead a weaker Korean won,” KB Securities analysts said. “The won-dollar rate rose nearly 10 won on Friday, but it is the second-biggest bearish range beside the British pound. The additional weakness pressure of won against the dollar is clearly high.”
By Jie Ye-eun (
yeeun@heraldcorp.com)
