Stock market ends lower as investors are still concerned about political uncertainties

By Yi Whan-woo

Korean stocks ended lower, Monday, as investors were unconvinced that political and economic uncertainties have been fully resolved in the aftermath of President Yoon Suk Yeol's impeachment.

The benchmark KOSPI lost 5.49 points, or 0.22 percent, to end at 2,488.97 points on the first trading day after the National Assembly passed a motion to impeach the president on Saturday.

It kicked off at 2,511.08, 16.62 points, or 0.67 percent, higher from Friday’s session, and climbed as high as 2,515.52 shortly after the opening.

The index surpassed 2,510 for the first time in 12 trading days, fueling optimism that investors were fully back to buying stocks after Yoon’s ill-fated martial law declaration on Dec. 3 rocked the nation as well as financial markets. The president has been suspended from duties following an impeachment motion, which will be finalized by the Constitutional Court.

The upward momentum, driven by retail investors, did not last long as foreign investors went on a selling spree.

The KOSPI turned lower, staying below 2,500 for the rest of the session.

Foreign investors and institutional investors sold 194 billion won worth of shares combined while retail investors purchased 77.2 billion won worth of stocks.

“Investors, in general, can be said to be taking a cautious approach, as Yoon’s impeachment is just the first step toward clearing a string of uncertainties, while not resolving them all,” Mirae Asset Securities analyst Seo Sang-youg said.

The analyst referred to the Constitutional Court’s review of Yoon’s impeachment, a process that can take up to six months.

The interim government led by Prime Minister Han Duck-soo as acting president will also need to grapple with a slowdown in GDP growth, sluggish private spending and other aggravating economic conditions.

The outlook for Korea's export-reliant economy and its U.S. investments remain bleak, as the unpredictable Donald Trump will return to the presidency next month.

Jung Eui-jung, head of the Korean Stockholders' Alliance, said the martial law crisis “further dented undervalued Korean stocks and it may take time for them to recover.”

Citing the Korea Exchange (KRX), Jung said the KOSPI as of last Thursday had a price-to-book ratio, or PBR, of 0.86, while its price-to-earnings ratio, or PER, stands at 13.65.

Both metrics indicate how much investors value the index. They have both declined from a year earlier.

The declining numbers persist despite the Corporate Value-up Program adopted by the government earlier this year to boost the stock market.

The KRX announced on Monday that it would launch an emergency response committee to deal with market volatility in real time.

“The committee will closely monitor domestic and foreign market trends,” the KRX said, explaining it will be tasked with strengthening market surveillance and taking "stern measures against unfair transactions that take advantage of uncertainties.”