Financial data are displayed on computer screens in the dealing room of Hana Bank in Seoul on Sept. 18, 2025. (Yonhap)
SEOUL, Sept. 18 (Korea Bizwire) — The U.S. Federal Reserve’s decision to lower its benchmark interest rate for the first time under President Donald Trump is fueling cautious optimism in Seoul’s financial markets, with analysts predicting improved liquidity and renewed foreign inflows — but also warning of lingering risks tied to trade negotiations.
On Wednesday (local time), the Fed cut rates by 25 basis points, its first reduction since December, and signaled the possibility of two more cuts this year as political and economic pressures to stimulate growth mount.
“This is expected to strengthen liquidity momentum and raise hopes for an economic recovery,” said Lee Kyoung-min, an analyst at Daishin Securities.
The move is also seen as potentially rekindling foreign investor appetite. “Foreign ownership across the KOSPI has rebounded to 33 percent, but that remains below pre-pandemic levels of 35 to 39 percent,” noted Na Jeong-hwan of NH Investment & Securities.
Some market watchers expect the benchmark index to extend its rally through year-end. “The KOSPI’s bullish run is likely to continue,” said Han Ji-young of Kiwoom Securities, though she cautioned that short-term volatility could intensify as investors digest the Fed’s latest guidance.
Yet, beyond monetary policy, South Korea’s trade outlook with Washington looms large. Hwang Jun-ho of SangSangIn Investment & Securities pointed to protracted tariff negotiations as a possible drag. Unlike Japan and the European Union, which secured agreements earlier, Seoul remains locked in talks over U.S. tariff reductions.
“If negotiations fail to conclude properly, it could undermine the government’s efforts to lift the stock market,” Hwang said, warning that semiconductors and biotech — sectors central to the KOSPI’s strength — may face renewed downward pressure.
M. H. Lee (mhlee@koreabizwire.com)
