Impact by THADD Deployment
Stocks of companies serving Chinese tourists to South Korea tumbled again due to China’s looming retaliation after barely surviving the aftermaths of the South Korean government’s announcement of a plan to deploy the THAAD system in the nation. Cosmetics and duty free shops depend heavily on Chinese tourist for their sales. Stock prices of cosmetics and duty free shop companies fell to yearly lows, sending down the Korea Composite Stock Price Index KOSPI.
On the KOSPI Stock Market on October 25, the stock price of Amore Pacific closed at 345,500 won, a yearly low, down from 7.12% from the previous day. Its market capitalization that once rose to fourth place was relegated below tenth place on the day. Not only that of Amore Pacific but those of most cosmetics companies dropped. Cosmax fell 8.49% to 118,500 won, hitting a yearly low once again. LG Household & Health Care and Kolmar Korea slid 8.34%, 8.26%, respectively. The index of the chemicals business sector declined 2.22% from the previous day due to a sharp drop in the stock prices of Amore Pacific and LG Household & Health, both of which have high portions of total market capitalization in the chemicals business sector. In particular, institutional investors sell cosmetics stocks that have been overvalued to take profits.
The same went for casino, leisure and duty free shop companies courting Chinese tourists. GKL and Paradise fell 6.80% and 5.02% to nearly yearly lows, respectively, at the closing bell of the day. Duty free shop operators including Hotel Shilla and Sinsegae plunged 5% or more as well.
Such Chinese tourist-related stocks plummeted with the opening bell of the market as it was reported that the Chinese government orally ordered a 20% cut in the number of Chinese tourists to South Korea by April of next year on the previous day.