The Korea Stock Price Index, or KOSPI, was launched in 1983. The index began with a base value of 100 as of January 1980 and is the primary index of South Korea. The index represents all common stocks listed on the Korea Exchange. It is calculated using a market capitalization method. The index was switched from Korea Stock Price Index to KOSPI in 1983. The official Korean name for the index was changed to Koseupi jisu in 2005.
The index traded below the 1000 level for several years after its introduction. It did not break out above this level until 1989. In another major milestone, the index broke the 2000 level in 2007.
Since making a high around 2250 in April, the index has been trending lower. Although well-off its recent swing low, a series of lower highs could potentially indicate another push lower. The index is currently sitting near the 2060 level. A breach on a closing basis below the 2015 and 2016 lows in the 1845 region could potentially set the stage for a much more significant leg lower. A band of resistance may be seen in the 2100 to 2129 region followed by another key resistance point as the index approaches the 2250 area.
Asian markets have been susceptible to swings and volatility as the ongoing U.S./China trade war takes a toll. Although trade talks continue, hopes for a deal do not appear high and recent actions suggest that it may still be some time before a long-term agreement can be reached. Washington expanded its trade blacklist to include some of China’s top IA firms on Monday. The Chinese Ministry of Commerce said the companies should be removed from the list as soon as possible.
The trade war has had a measurable effect on the globe’s first and second-largest economies that has spilled into other regions. The ongoing global slowdown combined with the war on trade has even affected monetary policies. Both China and the U.S. have implemented easing measures already and further central bank action is likely if the data stream deteriorates further. In addition, further tariffs in the war on trade could also give the Fed and other central banks reason to cut rates.
In addition to the trade war, ongoing unrest in Hong Kong could potentially fuel volatility in Asian markets. China has recently doubled the amount of troops in Hong Kong, and any escalation could be a major source of angst for global financial markets.
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