(Bloomberg) -- South Korean shares slumped to their lowest in a year, as foreign investors sold major exporters including Samsung Electronics Co. that are vulnerable to Donald Trump’s protectionist trade policy.
The benchmark Kospi index closed down 2.6% Wednesday, making itself the worst performer in Asia amid a regional selloff caused by worries about the US President-elect’s proposed tariffs and policies that may keep inflation elevated.
Chipmaker Samsung Electronics and steel producer Posco Holdings Inc. were among the biggest contributors to Kospi’s losses.
The selloff in Korea is the latest reminder of the more pronounced impact of Trump’s isolationist vision for America, especially the prospect of higher trade barriers, on economies that have thrived on globalization. The trade-related worries add pressure to a market already reeling from concerns about Samsung, the stock benchmark’s biggest-weighted member, given its inability to gain traction in the AI memory sector.
Exports accounted for nearly 36% of Korea’s gross domestic product in 2023, according to data from the Korea International Trade Association.
“Foreigners are dumping both KRW and export companies, notably Samsung,” said Jung In Yun, chief executive at Fibonacci Asset Management Global Pte. “Reserve cash for now so that we can re-enter this market after the Trump effect wanes. But today we sell.”
Since the Kospi’s July peak, Samsung has tumbled about 42%. The tech-heavy Kosdaq index slid to its lowest since January 2023.
Meanwhile, Korea Zinc Co.’s decision to scrap a $1.8 billion share sale just two weeks after the company surprised investors with the plan also soured sentiment.
“Trump’s election is net negative for Korea,” said Shawn Oh, an equities trader at NH Investment & Securities. “I think long-only buy sides and macro funds will be cutting Korea weighting after the election.”
--With assistance from Abhishek Vishnoi and Jaehyun Eom.
(Updates with exports’ share of Korea’s GDP and more comments)
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