Do Tariffs and Geopolitical Risk Matter? Evidence from South Korea's Large-Cap Companies

Grébel Szabolcs and Pesuth Tamás
Additional contact information
Grébel Szabolcs: Corvinus University of Budapest
Pesuth Tamás: Seoul National University

Journal of Economic Integration, 2026, vol. 41, issue 3, 601-622

Abstract: South Korea's stock market ranked among the top-performing emerging markets in early 2025, despite operating within a volatile environment characterized by elevated geopolitical and trade policy risks. Understanding the influence of these risks is critical, particularly following the U.S. tariff announcements in 2025, which generated substantial market turbulence. This study applies an event study to assess the impact of the April tariff announcements and the subsequent 90-day suspension in the KOSPI 50 Index. Abnormal returns were estimated for each company and at the sector level for both events. The results indicate that the South Korean market responded negatively to the tariff announcements, with significant effects in a limited number of sectors, including both export-oriented and financial sectors. Following the suspension of tariffs, the consumer staples, manufacturing, and financial sectors demonstrated outperformance based on Cumulative Average Abnormal Returns (CAAR). Small-cap firms outperformed large-cap firms during the shock period at the index level.

Keywords: Tariffs; Geopolitical Risk; Stock Market; Event Study; South Korea (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.e-jei.org/upload/jei-2026005.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:023566

DOI: 10.11130/jei.2026005

Access Statistics for this article

Journal of Economic Integration is currently edited by Jungsuk Kim

More articles in Journal of Economic Integration from Center for Economic Integration, Sejong University Contact information at EDIRC.
Bibliographic data for series maintained by JEI ().