FX.co ★ KOSPI Slips as Q1 GDP Shrinks

The benchmark KOSPI index declined by 0.2% to approximately 2,521 points on Thursday, reversing a robust 1.6% increase that brought it to nearly a one-month high during the previous session. This downturn followed preliminary reports indicating an unanticipated contraction in the GDP for the first quarter. The economy contracted by 0.2% on a quarterly basis in the first quarter of 2025, contrary to expected growth of 0.1%, while the annual GDP decreased by 0.1%, falling short of the predicted 0.2% growth. This economic performance occurs amid escalating domestic political instability and the repercussions of US-imposed tariffs. On a related note, South Korea and the United States were preparing to engage in their inaugural "2+2" trade discussions in Washington, stirring optimism for possible alleviation of current tariffs. In corporate developments, SK Hynix reported a significant increase in Q1 profits, more than doubling to 7.4 trillion won, propelled by strong sales of AI chips. Additionally, the company's quarterly revenue surged by 42% to 17.6 trillion won. Despite these positive results, SK Hynix shares retreated by 0.7%, while those of its competitor, Samsung Electronics, declined by 0.4%. In contrast, shares of shipbuilding and defense sector stocks rose following US Treasury Secretary Bessent's call for allies to bolster their defense commitments.