It turns out there was no geopolitical risk on the Korean financial market caused by the decision of deploying the Terminal High Altitude Area Defense (THAAD) missile.
In the stock market opened on July 11, the Korea Composite Stock Price Index (KOSPI) started with an edge-up by over 1 percent point compared to last weekend, recovering the 1980 point level, amid the concerns brought about by the issue of deployment of THAAD. Rather, it reached almost the 1990 point level with the warm breeze blown from the U.S. With various business indicators in the US taking a favorable turn, domestic enterprises also are presenting the performances satisfying the market expectations, heightening a possibility of relief rally continuing for a while. The stock value of Samsung Electronics increased almost 2% by the earning surprise effect, hitting the record high price of the year.
According to Market Point on July 11, KOSPI closed at 1988.54, which increased 25.44 points or 1.30% compared to the previous day. After the announcement of THAAD deployment on July 8 by South Korea and the US, KOSPI decreased more than 10 points. Nevertheless, it succeeded in rebounding on the day, waiting for a re-entry to the 1990 level ahead.
In addition, the won-dollar exchange rate opened at 1150.0 won in the Seoul foreign exchange market on the day, which decreased by 11.8 won compared to last weekend.
The strong opposition of North Korea gave positive influence on defense stocks, such as Victek Co., Ltd., Huneed Technologies Co., Ltd., Hanwha Techwin Co., Ltd., and Korea Aerospace Industries, Ltd. On the other hand, the stocks related to Chinese consumers remained weak, including LG Household & Health Care, Hankook Cosmetics, Korea Kolmar, Able C&C, Hanatour Service, and Hotel Shilla, which all belong to the industries of cosmetics, travel, leisure,
However, if the economic relations with China, which accounts for a quarter of the total trade of the nation, come into conflict owing to the deployment of THAAD, its impact on the Seoul bourse is hard to predict.
In other words, if flowing-out of Chinese capital, spreading of anti-Korean sentiment in China, and economic retaliation become a reality, the Korean stock market will face a damage that is not a circumstance to that of Brexit.