KOSPI on edge over 'Wash shock'?…Samsung Electronics, SK Hynix weaker in pre-market

The KOSPI has shifted into a risk-off stance after US President Donald Trump on the 30th of last month (local time) nominated Kevin Warsh, a former Federal Reserve governor widely seen as relatively hawkish (favoring monetary tightening), as a candidate for the next Fed chair.

As of 8:10 a.m. on the 2nd, Samsung Electronics and SK Hynix were trading on the NXT pre-market at 157,600 won and 879,000 won, down 1.81% and 3.3%, respectively. Hyundai Motor was also down in the 3% range.

After Trump nominated Warsh as a candidate for Fed chair, global asset markets slumped across the board over the weekend. On the 30th of last month (local time), the Nasdaq Composite fell 0.94%, while the S&P 500 and the Dow Jones index declined 0.43% and 0.36%, respectively.

Even gold and silver, seen as safe-haven assets, fell. On the same day on the New York Mercantile Exchange, international gold prices plunged 11.38% in a single session, and silver prices tumbled 31.37%. Bitcoin also dropped to the $70,000 level for the first time in nine months.

This is interpreted as reflecting concerns that liquidity could dry up in asset markets as expectations for rate cuts weaken.

In contrast, the dollar strengthened. The dollar index, which measures the US dollar’s value against a basket of six major currencies, rose 0.75% to 96.85, reflecting the risk-off tone.

Warsh, while serving as a Fed governor in 2010, publicly criticized then-Chair Ben Bernanke’s second round of quantitative easing (QE2), saying, "A central bank artificially lowering interest rates is financial repression that transfers wealth from savers."

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com