South Korea’s financial market has been tumbling for days due to growing volatility triggered by unfavorable events both at home and abroad.

Seoul’s main bourse Kospi failed to close above the 2,000 mark, a psychological barrier for investors, for two days in a row, reflecting adverse impacts from the ongoing political scandal here as well as the unpredictable US presidential election. 


The stock index finished at 1,978.93 on Wednesday, down 1.42 percent from the previous trading session. The index lost 1.42 percent Tuesday.

During day trading, the Kospi even fell under the 1,980 mark, sliding to 1,979.66 at 11:23 a.m. It marked a new low since the index touched 1,977.81 on July 11.

Foreign investors sold a total of 2.76 trillion won ($2.4 billion) worth of Korean shares in the past two days.

Local analysts say the securities market is losing growth momentum as growing uncertainties worldwide constrain investors’ appetite.

“Investors have been aware of the worsening Choi Soon-sil scandal and a rate freeze by the US Fed in November,” said Lee Sang-jae, head of research at Eugene investment & Securities. “Today, the greater uncertainty stemming from the US election played a bigger role in dragging down not only the Korean market, but also other Asian markets.”

Domestically, the Choi scandal is partly aggravating investor sentiment, he added.

“Investors are taking a wait-and-see stance as the world’s biggest political event is approaching,” said Bae Sung-young, a researcher at Hyundai Securities. “As the race between Donald Trump and Hillary Clinton is getting more neck and neck, the Kospi is feeling greater burdens.”

In addition, investors are turning their backs on the Korean market in anticipation the US dollar would strengthen after the Federal Open Market Committee meeting on Tuesday and Wednesday, although the US Fed is forecast to keep its fund rates at the current level at least until December.

The country’s tech-heavy Kosdaq has been on a downhill slide in recent days as well. The index closed at 606.06 on Wednesday, down 3.24 percent from the previous day.

By Song Su-hyun  (song@heraldcorp.com)