The South Korean stock market is being significantly impacted by the policy direction of the second Trump administration. The photo shows a news report about U.S. President Donald Trump’s tariff policies displayed on a status board in the dealing room of Hana Bank’s headquarters in Jung-gu, Seoul, on the morning of January 22. (Yonhap)
SEOUL, Jan. 26 (Korea Bizwire) — South Korea’s stock market extended its winning streak last week, buoyed by investor relief over a tempered approach from the second Trump administration, which had raised fears of aggressive trade policies.
The KOSPI index climbed 13.25 points (0.52%) to close at 2,536.80, marking its fifth straight weekly gain — a streak last seen in mid-2024.
President Donald Trump, sworn in on January 20, reaffirmed plans to impose tariffs on Mexico, Canada, and China starting February 1 but indicated that broader tariffs were not yet under consideration.
He also signaled openness to dialogue with China, revealing plans for a phone call with President Xi Jinping and a visit to China within 100 days. These gestures eased investor fears and supported market gains.
During the week, foreign investors were net sellers, offloading ₩581.5 billion ($445 million) worth of shares, while institutional investors became net buyers for the first time in three weeks, purchasing ₩389.7 billion ($298 million).
The machinery and equipment sector, buoyed by Trump’s policies, led gains with a 7.66% increase, followed by construction (6.31%) and pharmaceuticals (3.14%). Conversely, the insurance sector and IT services faced declines of 6.87% and 2.44%, respectively.
The KOSDAQ index also rose, adding 4.05 points (0.55%) to end the week at 728.74, marking a four-week upward trend.
This week’s trading will be limited due to the Lunar New Year holiday, with the stock market open only on January 31.
However, several major global events during the holiday period, including the Federal Reserve’s Federal Open Market Committee (FOMC) meeting and earnings reports from leading U.S. tech firms, are expected to influence investor sentiment upon reopening.
The KOSPI closed at 2,536.80 on January 24, the last trading day before the Lunar New Year holiday, up 21.31 points (0.85%) from the previous session. The KOSPI index and related figures are displayed on a status board in the dealing room of Hana Bank’s headquarters in Jung-gu, Seoul, in the afternoon. (Yonhap)
The FOMC is widely expected to keep interest rates unchanged, with the focus shifting to Federal Reserve Chair Jerome Powell’s remarks on inflation and the Trump administration’s economic policies.
Market analysts anticipate that Powell’s tone could sway investor sentiment, particularly in light of softer U.S. inflation data from December.
Big tech companies, including Microsoft, Meta, Tesla, Apple, and Amazon, are set to release earnings this week.
Analysts will closely monitor not only their financial performance but also their capital expenditure plans, which are seen as a barometer for business confidence under the Trump administration’s pro-investment policies.
Although the market faces potential volatility due to the condensed timeline for digesting these developments, history offers a silver lining.
Over the past two decades, the KOSPI has risen by an average of 0.33% in the trading sessions following the Lunar New Year holiday, with gains outpacing losses in 15 out of 24 years.
Investors will be cautiously optimistic as they navigate this critical week, with an eye on the broader global economic landscape and its implications for South Korea’s market trajectory in 2025.
Ashley Song (ashley@koreabizwire.com)
