Post by : Meena Ariff

South Korean shares ended lower on Monday, mainly because of worries over possible U.S. tariffs on semiconductor imports. Reports suggested that U.S. President Donald Trump would soon announce tariffs on imported chips, which caused investors to sell shares in South Korea’s major chipmakers.

The local currency, the won, gained strength against the U.S. dollar, while bond yields in South Korea rose. These factors combined added more caution to the market.

KOSPI Index Closes Down

The benchmark KOSPI index fell by 48.38 points, or 1.50%, closing at 3,177.28. The drop was mainly driven by losses in the semiconductor sector. Samsung Electronics, one of South Korea’s largest chipmakers, fell 2.23%, while SK Hynix lost 3.25%. LG Energy Solution, a leading battery manufacturer, also fell by 2.79%.

Investors reacted nervously after news that the U.S. government plans to announce tariffs on steel and semiconductor imports shortly. Semiconductors are a major part of South Korea’s export-driven economy, so any potential tariffs could have a significant effect.

Performance of Other Major Companies

Not all companies saw losses. Some had mixed results. Shipping company HMM rose more than 7% after announcing a major share buyback plan worth up to 2.1 trillion won. Share buybacks can signal confidence in a company’s finances and often support stock prices by reducing the number of shares in circulation.

Automakers Hyundai Motor and Kia Corp experienced smaller declines, dropping 0.46% and 1.45%, respectively. Steelmaker POSCO Holdings fell by 1.95%, while drugmaker Samsung BioLogics decreased slightly by 0.48%.

Out of the 934 stocks traded on Monday, 198 advanced, while 701 declined. Foreign investors sold shares worth 540.2 billion won, putting extra pressure on the market.

Currency Movement: Won Strengthens

The South Korean won strengthened against the U.S. dollar. On the domestic trading platform, the won was valued at 1,385.0 per dollar, up 0.32% from its previous close of 1,389.5. Offshore trading showed a similar increase, with the won at 1,385.0 per dollar, up 0.3%. Meanwhile, the one-month non-deliverable forward contract was at 1,382.3 per dollar.

So far this year, the won has appreciated by 6.3% against the U.S. dollar. While a stronger currency is generally good for domestic buying power, it can create challenges for exporters. Companies like Samsung Electronics and SK Hynix may face lower profits if their products become more expensive in the U.S. and other overseas markets.

Bond Market Trends

In the bond market, September futures for three-year Korean treasury bonds fell slightly to 107.36. The yield on the most active three-year bond rose by 2.8 basis points to 2.426%, while the benchmark 10-year bond yield increased by 5.2 basis points to 2.838%.

Rising bond yields usually mean higher borrowing costs for both companies and consumers. Investors often watch these rates closely because they can indicate inflation trends or expectations for interest rate changes in the future.

Semiconductor Tariffs: Main Market Concern

The sharp decline in chip stocks reflects investors’ concerns about potential U.S. tariffs. South Korea is one of the world’s top exporters of semiconductors, and companies like Samsung Electronics and SK Hynix rely heavily on the U.S. market. If tariffs are imposed, the cost of South Korean chips in the U.S. could rise, potentially reducing demand and affecting company profits.

Investors are paying close attention to announcements from the U.S. government. The timing, size, and specific rules of the proposed tariffs will likely determine how markets move in the coming weeks.

HMM Share Buyback Boosts Investor Confidence

While chip stocks struggled, HMM, a South Korean shipping company, saw a strong gain of over 7%. This came after the company revealed a share buyback plan worth up to 2.1 trillion won.

Share buybacks reduce the number of shares available on the market. This can increase earnings per share and often supports stock prices. HMM’s decision shows that some sectors can still perform well despite broader market concerns, providing hope for investors looking for stability in volatile times.

Market Outlook

The KOSPI has risen by 32.41% so far this year, reflecting strong gains over the first eight months of 2025. Despite short-term volatility and external risks such as U.S. tariffs, South Korea’s economy remains resilient. Its strong export sector and solid corporate fundamentals continue to support the stock market.

Investors will be keeping a close eye on currency trends and bond yields. A stronger won could pressure exporters, while higher bond yields may influence investment choices in both stocks and bonds. Analysts suggest that while some ups and downs are expected, the overall market outlook remains cautiously positive.

South Korea’s stock market reacted to both domestic and international factors on Monday. Chipmakers like Samsung Electronics and SK Hynix faced declines due to fears of U.S. tariffs, while companies like HMM benefited from strategic financial decisions such as share buybacks.

As investors await more information from the U.S. government, the coming weeks will be critical for the South Korean market. Exporters, bondholders, and domestic companies alike will need to navigate currency changes, rising yields, and global trade developments. Despite short-term challenges, South Korea’s market shows underlying strength and resilience in its economy.