Daily stock trading volume in South Korean in July hit this year’s low after investor sentiment turned sour amid the protracted trade dispute between the world’s two biggest economies China and the U.S. and a deepening political and trade spat between Japan and Korea.

According to data released by Korea Exchange (KRX) on Sunday, the daily trading volume of local stocks, including those in the main Korea Composite Stock Price Index (Kospi) and secondary Korea Securities Dealers Automated Quotations (Kosdaq), averaged 8.59 trillion won ($7.1 billion) in July, down 4 percent from the same month last year and 3.4 percent from the previous month.

The daily trading volume has remained above 9 trillion won this year until May before falling to 8.89 trillion won in June and even lower in July. By market, the daily trading volume in the Kospi market stood at 4.4 trillion won and that of Kosdaq 4.1 trillion won.

The backtracking in the reading comes despite various government efforts to boost the country’s sluggish stock market such as by reducing taxes on stock transactions. Taxes on buying and selling shares were lowered from 0.30 percent to 0.25 percent from the end of May, the first cut in 23 years since 1996.

Analysts blamed the yearly low stock turnover in July to a number of unfavorable market conditions.

Last month, the United States and China held high-level trade negotiations in Shanghai but ended without progress. Market uncertainties intensified also after Japan has tightened export control on three high-tech materials essential for the production of chips and displays shipped to Korea.

In July, the benchmark Kospi retreated 5 percent from the previous month and the Kosdaq 8.7 percent. Stock prices of major listed companies also plunged. Of top 100 market cap shares as of the end of July, 80 stocks saw their prices go down last month.

Analysts noted that investor sentiment would continue to remain sluggish for a while. KRX data showed that the outstanding loans for stock purchases extended by brokerages to retail investors dropped from 10.47 trillion won in the end of June to 9.48 trillion won last month and 8.18 trillion won on Aug. 8.

By Chung Hee-young and Lee Eun-joo

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