'Warsh Shock' Hits Domestic Market... Silver ETNs Plunge 50%

Silver exchange-traded funds (ETFs) and exchange-traded notes (ETNs) in South Korea plunged sharply. This was due to the collapse in international precious metal prices following the nomination of Kevin Warsh as the next chair of the US Federal Reserve (Fed). On the morning of February 2, the domestic stock market index started the session with a decline of nearly 2%, recovered some of the losses, but then fell again by more than 2%. The foreign exchange market was also affected, with the won-dollar exchange rate surging by more than 10 won early in the session.

On the morning of February 2, silver and gold ETFs dominated the list of lowest-performing ETFs in the domestic stock market. KODEX Silver Futures (H) plunged by more than 20%. ACE Gold Futures Leverage (Synthetic H), TIGER Gold & Silver Futures (H), HANARO Global Gold Mining Companies, TIGER Gold Futures (G), and TIGER KRX Gold Spot all recorded double-digit declines. Among ETNs, silver futures leverage ETNs suffered losses of nearly 50%, sweeping the bottom of the performance rankings as well.

On this day, the KOSPI index opened at 5,122.62, down 101.70 points (1.95%), plunged to the 5,080 level at one point during the session, recovered some losses, but as of 10:45 a.m., fell again to 5,109.08 (-2.21%). The KOSDAQ index opened at 1,128.57, down 20.87 points (1.82%), and as of 10:45 a.m., recorded 1,120.69 (-2.50%).

Lee Euntaek, a researcher at KB Securities, stated, "Since Warsh was nominated as the Fed chair candidate, turmoil has emerged in asset markets, and this could persist for some time. In particular, there may be a desire to realize profits in assets that have surged recently, such as precious metals and emerging market equities, which are on the opposite side of the dollar."

Meanwhile, in the Seoul foreign exchange market, the won-dollar exchange rate was trading at 1,451.0 won as of 9:05 a.m., up 11.5 won from the previous session's weekly closing price (as of 3:30 p.m.). After opening at 1,451.0 won, up 11.5 won, it fluctuated around the 1,450 won level.

This content was produced with the assistance of AI translation services.