South Korea’s Kospi index falls 1% to 3,178.62

South Korea’s Kospi index falls 1% to 3,178.62

South Korea's Kospi index dropped by 1.06% to 3,178.62 on July 2, 2025, as financial sector stocks led the decline. The benchmark KOSPI fell 17.96 points, or 0.56%, to 3,174.33 on July 18, 2025 [1]. The KOSPI is expected to end the week largely flat, with resistance around the 3,200 level [1].

The fall in the Kospi index was driven by dour performances among financials, with securities firms dropping 3.19% and the financials' sub-index losing 1.76% [1]. Key financial stocks, such as KB Financial Group, Shinhan Financial Group, and Woori Financial Group, lost more than 1% each [1]. The broader financial sector's underperformance was attributed to ongoing uncertainty over U.S. trade discussions and President Donald Trump's latest tariff threats [1].

U.S. President Trump's threat of imposing 25% duties on South Korea if no deal is reached by August 1 has kept investors on edge [1]. South Korea's new finance minister, Koo Yun-cheol, and the country's top trade envoy, Yeo Han-koo, will meet with U.S. counterparts in Washington on Friday to discuss tariffs [2]. The talks aim to secure favorable terms and potentially remove or cut tariffs threatening key South Korean industries [2].

The Korean won strengthened against the dollar, quoted at 1,391.1 per dollar on the onshore settlement platform, up 0.08% from its previous close [1]. The won's appreciation was likely driven by the financial sector's underperformance and the overall cautious investor sentiment.

In the money and debt markets, the most liquid three-year Korean treasury bond yield fell by 0.3 basis points to 2.477%, while the benchmark 10-year yield fell by 2.3 basis points to 2.881% [1]. The decline in bond yields suggests that investors are seeking safer assets amid the uncertainty over U.S. trade discussions.

The South Korean stock market has alternated between positive and negative finishes over the past few days, with the KOSPI expected to see additional mild upside on Tuesday [3]. The global forecast for the Asian markets offers little clarity, with investors waiting for developments in tariff deadlines and U.S. economic indicators [4].

References:
[1] https://www.livemint.com/market/stock-market-news/south-korean-shares-fall-on-financials-us-trade-caution-11752807875461.html
[2] https://www.reuters.com/world/asia-pacific/south-korea-finance-minister-trade-envoy-hold-tariff-talks-with-us-counterparts-2025-07-22/
[3] https://tradingeconomics.com/south-korea/stock-market
[4] https://www.nasdaq.com/articles/kospi-likely-remain-rangebound-tuesday