Global stock markets experienced sharp swings after the United States introduced tough tariff policies, but South Korea’s stock market remained relatively resilient. The tech-heavy and secondary KOSDAQ index, in particular, rose following the announcement of U.S. reciprocal tariffs, which analysts attribute to the chronic undervaluation of the Korean market.
The Korea Exchange reported on April 13 that, from April 3 to 11, following the U.S. tariff announcement, only Indonesia’s IDX Composite (up 4.3%) and South Korea’s KOSDAQ (up 1.57%) saw gains among the 24 major stock indices of the G20 countries.
The KOSDAQ index fell 0.20% immediately after U.S. President Donald Trump announced higher-than-expected tariffs on April 3 but rebounded with a 0.57% rise the following day. The index then dropped sharply by 5.25% on April 7 and 2.29% on April 9, following the U.S. stock market’s steep decline. However, it surged by 5.97% on April 10 after the U.S. delayed the tariffs and rose another 2.02% on April 11, fully recovering from the earlier losses.
During the same period, the benchmark KOSPI index fell by 2.92%, ranking fifth among the 24 indices. Although its drop was larger than Turkey’s BIST 100 index (-1.94%) and Australia’s All Ords index (-2.70%), it performed better than most other global indices.
The U.S. Dow Jones index dropped more than 6%, while European and North American indices, including the Euro Stoxx 50 (-9.14%) and those in Canada, France, and Italy, saw nearly a 10% decline.
The U.S. tariff policies are expected to have a significant impact on the global economy, raising concerns about a potential global recession. Despite this shock, South Korea’s stock market resilience can be attributed to the already low stock prices driven by weak earnings from local companies last year. As of April 7, the KOSPI’s price-to-book ratio (PBR) stood at 0.79, lower than during the 2008 financial crisis (0.81).
In addition, the shipbuilding sector, which has strong ties to the U.S., helped support the market’s performance. For the KOSDAQ, large-cap pharmaceutical and biotech stocks, which were less affected by the tariff policies, played a key role in pushing the index higher.
Looking ahead, stock market fluctuations are expected to continue as U.S. tariff policies evolve. Choi Kwang-hyuk, an economist at LS Securities, noted, “Although the U.S. has delayed the tariffs for 90 days, growth forecasts for many countries are still being revised downward. The volatility and concerns stemming from the tariff policies are likely to persist until the third quarter.”
