South Korea‘s stock markets erased their morning loss in the afternoon Friday, dwarfing investor concerns about US President Donald Trump’s announcement to cancel a planned summit with North Korea leader Kim Jong-un in June.

In Friday closing, the top-tier stock market Kospi edged down 0.2 percent from Thursday‘s close, narrowing down 0.9 percent loss in early morning trade. The tech-heavy Kosdaq capped its loss to 0.6 percent, from 1.6 percent in the morning.

On Kospi, foreign investors and institutional investors net purchased stocks worth 332.1 billion won ($307.6 million) and 126.4 billion won, respectively, while retail investors net sold 479.1 billion won worth stocks. Losers outnumbered gainers 691 to 168.

This came after the Bank of Korea’s senior deputy governor Yoon Myun-shik told reporters that the central bank does not plan for a countermeasure against the impact from US-North Korea summit cancellation, after presiding over a contingency meeting held Friday morning. 

He cited global market‘s intraday recovery. US’ Dow Jones Industrial Average and S&P 500 on Thursday rebounded off earlier lows to finish 0.3 percent and 0.2 percent lower, respectively.

Also overnight, Kospi 200 futures during a night session until Friday morning managed to recoup losses made immediately after the Trump announcement. To the lowest, Kospi 200 futures fell 1.7 percent compared to the previous session, but ended 0.4 percent lower.

Local analysts echoed the central bank official‘s remark, citing “neutral impacts” on the market over the course of rapprochement surrounding North Korea in the past few months. 

“Next week, Korean stock markets are expected to experience volatilities, but the impact from the summit cancellation will be limited, considering North Korea’s move to denuclearization and summits had had neutral impact on the market,” wrote Lee Jae-sun, an analyst of KTB Investment & Securities, in a note Friday. From March until Thursday closing, Kospi climbed up 1.6 percent, showing ups and downs in between. 

Rather, investors would be more keen on the future trajectory of key rates, dollar changes and crude price, Lee added. 

Another analyst, Lee Eun-taek at KB Securities, wrote Friday investors would be more inclined to profit-taking through stock selloff, until signs of US-North Korea summit would resurface.

By sectors, construction sector slipped 5 percent, while pharmaceutical sector rose 2.5 percent and semiconductor sector jumped up 2.2 percent. 

Stocks related to inter-Korean businesses took losses. On Kospi, Hyundai Engineering & Construction dropped 9,8 percent, while Hyundai Elevator sank 16.8 percent. Kosdaq-listed Eehwa Construction and Daea TI plunged 19.8 percent and 19.2 percent, respectively, while Daechang Solution hit price floor.

But regardless of the Trump-Kim summit cancellation, Ha In-hwan of SK Securities wrote in a note Friday it was plausible to see that time was ripe for inter-Korean business-themed stocks to have market correction, citing non-materialization of plans for business cooperation between the two Koreas over the course of diplomatic developments.

As to semiconductor sector, Ha highlighted increased foreign capital influx into listed information technology-related manufacturers in South Korea. From Monday to Thursday, offshore and institutional investors net bought shares in IT sectors worth 480.3 billion won and 195.7 billion won, respectively, showed Ha‘s estimate.

Meanwhile, the Korean won strengthened by 1.6 won against the greenback, trading at 1,078 won at Friday session‘s close, compared to Thursday. Sovereign bond yields were mixed. The three-year state bond yield inched up 0.7 basis point, while the 20-year bond yield slipped 1.7 basis points.

By Son Ji-hyoung (consnow@heraldcorp.com)