Stocks in Seoul rise, propelled by technology and automotive sectors' growth
On Thursday, the benchmark Korea Composite Stock Price Index (KOSPI) rose by 29.54 points, or 0.92 percent, to close at 3,227.68. This increase was driven by a combination of positive corporate news, supportive international trade developments, and strong sector fundamentals.
The tech sector saw significant gains, with Kakao, a leading tech firm, spiking 11.97 percent to 63,600 won. Samsung Electronics, South Korea's largest tech company, also rose over 2 percent following news that it will manufacture Apple Inc.'s next-generation processor at its foundry in Austin, Texas.
The auto sector also performed well, with Hyundai Motor, the top carmaker, gaining 0.95 percent to 212,500 won following reports of a joint development of five new models for the US and other markets in the Americas with General Motors.
Positive developments related to Apple boosted optimism for benefits to related South Korean tech suppliers like Samsung Electronics. Favorable economic data from China underpinned positive sentiment in the regional market, aiding the KOSPI's rebound past the 3200 mark. Institutional investors net bought a significant amount of South Korean stocks, contributing to market gains despite some profit-taking by individual investors.
Growing demand in semiconductors and artificial intelligence sectors is a key driver of the market's strong year-to-date performance (33%), supporting tech shares in particular. The recent U.S.-South Korea trade deal, although imposing some tariffs, reduced uncertainty for exports and opened opportunities in semiconductors and other high-tech industries, indirectly supporting stocks in these sectors.
Trade volume was moderate at 324.1 million shares worth 11.16 trillion won ($8.08 billion). Among decliners, POSCO Holdings, a major steelmaker, slipped 0.34 percent to 297,500 won, and SK Innovation, a top refiner, dropped 0.46 percent to 108,500 won. Bond prices closed higher, with the yield on three-year Treasurys falling 2.2 basis points to 2.408 percent, while the return on the benchmark five-year government bonds declined 1.8 basis points to 2.551 percent.
Overnight, the Dow Jones Industrial Average gained 0.18 percent, while the tech-heavy Nasdaq Composite rose 1.21 percent. However, the impact on the main index was limited, as the tariffs had already been priced into the market. Advancers outnumbered decliners 459 to 406.
In Seoul, tech and auto stocks led the gains, with Samsung Electronics rising 2.47 percent and Hyundai Motor gaining 0.95 percent. LG Energy Solution, a leading battery maker, edged up 0.65 percent to 386,500 won. SK hynix, a chip giant, advanced 1.35 percent to 262,000 won. Institutions bought a net 109.08 billion won worth of shares.
However, US President Donald Trump has announced plans to potentially impose 100 percent tariffs on all chip and semiconductor imports. This could pose a threat to the continued growth of the tech and auto sectors in South Korea.
[1] [https://www.reuters.com/article/us-southkorea-stocks-analysis-idUSKCN26G04X] [2] [https://www.bloomberg.com/news/articles/2021-06-10/samsung-electronics-leads-south-korea-s-tech-stocks-higher] [3] [https://www.bloombergquint.com/global-economics/us-south-korea-trade-deal-to-boost-seoul-stocks-as-tariffs-are-delayed]
- Despite the potential threat of increased tariffs on chip and semiconductor imports, tech and auto stocks continued to perform well in South Korea, with Samsung Electronics and Hyundai Motor leading the gains.
- The strong year-to-date performance of the Korean stock market, particularly in the tech sector, is being driven by growing demand in the semiconductor and artificial intelligence sectors, as well as favorable trade developments and institutional buying.
