Japanese, South Korean Markets Plunge Amid Trade Tensions, U.S. Tariff Fears

On Friday, the Japanese and South Korean stock markets experienced significant declines. The Nikkei 225 index in Japan closed with a 3.0% drop, settling at 33,585.58 points. The downturn was led by the electronics, pharmaceuticals, and automotive sectors, with prominent companies such as Sony Group, Chugai Pharmaceutical, and Nissan Motor seeing substantial decreases in their stock prices, falling by 7.4%, 6.4%, and 6.3% respectively.

The South Korean composite index also ended the day in the red, declining by 0.5% to 2,432.72 points. The automotive sector was the primary driver of this decline, with Hyundai Motor and Kia Motors experiencing significant drops in their stock prices, down by 5.1% and 7.0% respectively. The market sentiment was heavily influenced by the ongoing trade tensions and the potential impact of U.S. tariffs on imported vehicles.

The market's reaction to the trade tensions and the potential economic impact of U.S. trade policies contributed to the overall negative sentiment. The strength of the Japanese yen against the U.S. dollar added pressure on Japanese exporters, who rely on a weaker yen to maintain their competitiveness in international markets. The decline in the Nikkei 225 index was also influenced by broader market sentiment, which was affected by concerns over global economic growth and geopolitical tensions.

Analysts noted that the U.S. tariffs on imported vehicles could have a significant financial impact on South Korean automakers. Shinhan Securities analyst K.R. Park estimated that the tariffs could result in an additional annual expenditure of 8.8 trillion Korean won (approximately $60.5 billion) for Hyundai Motor. Park subsequently lowered the target price for Hyundai Motor's stock by 6.9%, to 270,000 won.

Hyundai Motor's sister company, Kia Motors, had previously adjusted its annual sales target for 2030 from 4.3 million vehicles to 4.19 million vehicles, reflecting the challenges posed by the trade environment. The market's response to these developments underscored the sensitivity of the automotive sector to trade policies and the potential for further volatility in the coming months.