South Korean shares reverse gains, KOSPI falls over 1% as US midterm results loom

South Korean shares reversed earlier gains on Tuesday, with the KOSPI falling more than 1% as investors positioned ahead of the US midterm election results. The move reflects a risk-reduction channel: with the outcome uncertain, traders are cutting exposure to export-heavy equities, since shifts in US congressional control could alter trade policy, tariff trajectories, and fiscal outlooks that feed directly into demand for Korean semiconductors, autos, and electronics. Korean shares are particularly sensitive to US trade and tariff signals because the economy depends heavily on exports to the United States and on global chip demand, making the KOSPI more exposed than domestic-focused markets. The next catalyst to watch is the first tally of House and Senate seat results, along with any early signals on which party controls each chamber, since a decisive outcome would likely reprice expectations for trade policy and US Treasury yields that influence regional capital flows.

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