TradingKey - Risk aversion surges on U.S. midterm election day; Japanese market closed while KOSPI plunges 3.59% below 5,700 points, with SK Hynix tumbling 5.71%.
During Asian trading hours on November 3, the Japanese stock market was closed for the national holiday 'Culture Day', while South Korean stocks were hit by a double whammy of risk aversion on U.S. midterm election day and aftershocks from a sell-off in U.S. chip stocks, opening sharply lower in the morning and remaining volatile and sluggish throughout the day.
The KOSPI closed down 3.59% at 5,648.79 points, falling below the 5,700-point level; Samsung Electronics plunged 4.59% to close at 218,500 won, losing the 220,000 mark; SK Hynix's drop widened to 5.71% at the close, standing at 1,388,000 won.
KOSPI index chart, Source: TradingView
Today (November 3) marks the official polling day for the U.S. midterm elections. With the battle for seats in both the Senate and the House reaching a white-hot phase, alongside unresolved directions on tech subsidies and regulatory bills, multinational institutional investors chose to systematically reduce risk exposure prior to the official announcement of ballot results, as sidelined capital locked in liquidity, dragging down the high-beta South Korean market.
As the results of the U.S. midterm elections trickle in later today through tomorrow, the clearing of political uncertainty is expected to encourage sidelined capital to flow back into risk assets, potentially sparking a post-election recovery in South Korean stocks. While the Japanese market avoided a sharp drop today due to the holiday, a catch-up decline may occur when trading resumes tomorrow.