South Korea’s main stock index, the KOSPI, suffered its worst weekly decline in three months, sliding 4.2% to close at 2,456.45 points on Friday. The sell-off accelerated midweek after reports emerged that the Trump administration is considering fresh tariffs of up to 25% on imported semiconductors and automobiles from South Korea. The technology and export-heavy index has now erased its gains for the year.
Heavyweight stocks bore the brunt of the selling. Samsung Electronics, the largest component of the KOSPI, fell 5.3% for the week, while memory chip maker SK Hynix dropped 5.8%. Automaker Hyundai Motor lost 4.1%. Analysts at KB Securities said the market was pricing in a worst-case scenario for South Korea’s export-dependent economy, which sends roughly 18% of its goods to the United States.
The weakness in Seoul comes against a backdrop of broader global trade uncertainty. The FTSE 100 in London edged 0.3% lower on Friday, partly weighed down by mining stocks with Asian exposure. The Japanese Nikkei 225 fell 1.8% this week, while Hong Kong’s Hang Seng declined 1.5%. South Korea’s won also weakened, trading at 1,450 won to the US dollar, a level not seen since late 2023.
For UK investors, the KOSPI rout is a reminder of the risks embedded in emerging market funds and exchange-traded funds. Many British pension funds hold a small allocation to South Korean equities through global tracker funds. A sustained downturn in Seoul could shave a fraction off returns, though direct exposure remains limited. Currency fluctuations also matter: a weaker won reduces the sterling value of any dividends paid by South Korean companies.
Looking ahead, market participants are watching for any signs of diplomatic progress between Washington and Seoul. South Korea’s trade minister is expected to travel to Washington next week for talks. If tariffs are imposed, analysts at Samsung Securities warn that the KOSPI could test the 2,400 level, a key psychological support. Source: Korea Exchange, KB Securities, Samsung Securities.