Market jitters grow in S. Korea over Trump's certain election victory

By Park Sae-jin Posted : November 9, 2016, 16:32 Updated : November 9, 2016, 16:32

Onlookers watch a TV news show broadcasting the United States presidential election results at Yongsan train station on Wednesday. [Photo by Yoo Dae-gil = dbeorlf123@ajunews.com]



South Korean shares fell 2.25 percent Wednesday amid jitters over a certain election victory by US Republican candidate Donald Trump advocating strong trade protectionism.

The benchmark KOSPI shed 45 points to 1,958.38. The local currency weakened to 1,149.5 won against the greenback.

Vice Finance minister Choi Sang-mok urged domestic and foreign investors to act in a calm manner, saying South Korea should be on guard against potential downside risks such as heightened trade protectionism and an interest rate hike in the United States.

"Excessive market volatility is not desirable. We will closely monitor the markets. ... and take quick measures to curb excessive volatility," he said.

As preemptive leveraging, foreign investors has been withdrawing from South Korea because of growing uncertainties over political turmoil at home, a prolonged business slump, and the impact of the US election and higher US interest rates.

Analysts predicted Trump's victory would have a limited short-term impact on financial markets. They are more concerned about a change in US trade policies as Trump displayed negative views especially about the Free Trade Agreement (FTA) between Seoul and Washington that took effect in 2012.

Trump advocates strong protectionism, describing the FTA as a "destroyer" of US jobs, especially in the auto industry.

In a speech in Detroit, Trump stepped up an attack on the FTA, calling it a "perfect" example of "broken promises". "Let's talk about South Korea for a moment, because it so perfectly illustrates the broken promises that have hurt so many American workers."

Definitely, his protectionist tone will be reflected in trade policies and may affect South Korea's trade surplus with the United States that grew from $15.2 billion in 2012 to $25.8 billion in 2015.

The state-run Korea Trade-Investment Promotion Agency said in a report that a Trump administration would deal a blow to exports of textiles and auto parts.

Instead, it may open new doors for South Korean firms as the business magnate is expected to launch massive social infrastructure projects to spur economic growth, the agency said.

Aju News Lim Chang-won = cwlim34@ajunews.com
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