Increased Bets on Trump Victory Lead to Two-Year Low for South Korean Won.

Seoul: Increased bets on Republican nominee Donald Trump's victory in the U.S. presidential election have pushed the South Korean won to a two-year low against the U.S. dollar. Korean stocks also ended lower for the second consecutive day.According to Yonhap News Agency, the local currency was trading at 1,396.2 won against the greenback at 3:30 p.m., marking a drop of 17.6 won from the previous session. This rate is the lowest since November 7, 2022, when the rate closed at 1,401.20. Investors are buying U.S. dollars, anticipating that Trump's potential victory would lead to increased fiscal spending and tax cuts, which would result in larger state debt sales and rising market rates.The possibility of protectionist policies with China and other nations through high tariffs is also expected to boost inflation in the U.S., leading investors to seek safer assets like gold and dollars. The benchmark Korea Composite Stock Price Index (KOSPI) fell 13.37 points, or 0.52 percent, closing at 2,563.51. Trade volum e was substantial at 538.2 million shares valued at 11.6 trillion won (US$8.3 billion), with losers outnumbering winners 552 to 324.Initially, KOSPI opened 0.37 percent higher but declined as bets on Trump's potential victory against Democratic nominee Kamala Harris increased. Lee Kyoung-min, an analyst at Daishin Securities, noted investor concerns that South Korea could be impacted by a U.S.-China trade conflict if Trump is re-elected. Additionally, there are worries that the benefits from the U.S. Inflation Reduction Act could diminish for key industries like batteries and autos.Tech giant Samsung Electronics experienced a 0.52 percent drop to 57,300 won, while its competitor SK hynix saw a 1.35 percent increase to 195,800 won. Battery and auto stocks declined due to bleak prospects for the electric vehicle sector under a potential second Trump term. LG Energy Solution fell 7.02 percent to 390,500 won, with smaller competitors Samsung SDI and POSCO Future M dropping 5.98 percent and 8.26 percent, respe ctively.Steel maker POSCO Holdings and chemical producer LG Chem both fell over 5 percent. Industry leader Hyundai Motor decreased 3.95 percent to 206,500 won, and Kia dropped 2.06 percent to 95,000 won. However, financial stocks saw gains, with KB Financial rising 3.3 percent to 94,000 won and Shinhan Financial increasing 3.32 percent to 56,000 won.Defense stocks also surged, with Hanwha Aerospace jumping 7.04 percent to 387,500 won. Bond prices fell, resulting in increased yields. The yield on three-year Treasurys rose 4.2 basis points to 2.960 percent, while the five-year government bond yield increased by 5.2 basis points to 3.023 percent.