Increased bets on Trump victory send won to 2-yr low, Seoul stocks down for 2nd day

The South Korean won dipped to a two-year low against the US dollar Wednesday on increased bets on Republican nominee Donald Trump's victory in the US presidential election. Korean stocks ended lower for the second consecutive day.

The local currency was trading at 1,396.2 won against the greenback at 3:30 p.m., down 17.6 won from the previous session, the lowest since November 7, 2022, when the rate closed at 1,401.20.

Investors rushed to buy US dollars as Trump's victory heralds an increase in fiscal spending and tax cuts, which will lead to an increase in state debt sales, and consequently help boost a rise in market rates.

Also, looming protectionism with China and other nations via high tariffs will also boost inflation in the world's largest economy and will increase volatility in the financial markets, which prodded investors to flock to safer assets, such as gold and dollars.

The benchmark Korea Composite Stock Price Index also dropped 13.37 points, or 0.52 percent, to close at 2,563.51.

Trade volume was heavy at 538.2 million shares worth 11.6 trillion won ($8.3 billion), with losers beating winners 552 to 324.

The Kospi had kicked off 0.37 percent higher but turned lower on increased bets for former President Donald Trump's victory in the US presidential election against Democratic nominee Kamala Harris.

"But the Kospi lost ground as investors were concerned that South Korea will become one of the victims of a trade conflict between the US and China when Trump becomes the president once again," said Lee Kyoung-min, an analyst at Daishin Securities.

Investors also showed concerns over benefits from the US Inflation Reduction Act disappearing for major industries, such as batteries and autos, in case of Trump's victory, he added.

Tech behemoth Samsung Electronics lost 0.52 percent to 57,300 won, while its chipmaking rival SK hynix increased 1.35 percent to 195,800 won.

Battery and auto shares shot down on dim prospects for the electric vehicle sector under a second Trump term.

Leading battery maker LG Energy Solution plunged 7.02 percent to 390,500 won, and its smaller rivals -- Samsung SDI and Posco Future M -- plummeted 5.98 percent and 8.26 percent, respectively, to 298,500 won and 216,500 won.

Steel giant Posco Holdings and top chemical producer LG Chem also slid more than 5 percent to 322,500 won and 305,500 won, respectively.

Industry leader Hyundai Motor dropped 3.95 percent to 206,500 won and its sister, Kia, lost 2.06 percent to 95,000 won.

But financial shares gained ground.

KB Financial was up 3.3 percent to 94,000 won and Shinhan Financial was up 3.32 percent to 56,000 won.

Defense stocks shot up, with Hanwha Aerospace, a leading defense and aerospace company, soaring 7.04 percent to 387,500 won. (Yonhap)