Seoul : Analysts say the Fed rate cut impact could lift South Korea’s stock market, boosting investor sentiment and trading activity in the near term.
On Wednesday (local time), the Fed lowered its benchmark interest rate by 25 basis points, marking the first rate cut since December and the first under President Donald Trump’s administration, Yonhap news agency reported.
The Fed also indicated the possibility of two additional rate cuts this year to stimulate growth amid political and economic pressures.
“This move should strengthen liquidity momentum and raise hopes for economic recovery,” said Lee Kyoung-min, analyst at Daishin Securities.
Na Jeong-hwan, an analyst at NH Investment & Securities, predicted the rate cut could increase capital inflows from foreign investors.
“Foreign ownership across the KOSPI rebounded to 33 percent but remains below pre-COVID-19 levels of 35 to 39 percent,” Na said.
Han Ji-young from Kiwoon Securities expects the KOSPI to maintain a bullish run until year-end but warned investors may face short-term volatility as they digest the Federal Open Market Committee meeting details.
Trade talks with Washington could also influence the local stock market, noted Hwang Jun-ho of SangSangIn Investment & Securities.
He cautioned that prolonged tariff negotiations with the U.S., compared to Japan and the European Union, could reduce South Korea’s export competitiveness and pressure the KOSPI.
“If tariff negotiations fail, they could offset government efforts to boost the stock market, leading to declines in key sectors such as semiconductors and biotech, which are expected to drive the KOSPI’s rise,” Hwang added.
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