South Korea Becomes World’s Worst Major Equity Market in '19

(Bloomberg) -- South Korean equities overtook those of Malaysia on Tuesday to become the world's worst major equity market for the year as ongoing trade war with Japan and tensions between the U.S. and China slashed the nation's earnings outlook.

The benchmark Kospi Index has dropped 6.1% year-to-date compared with 5.1% decline in the FTSE Bursa Malaysia KLCI Index as of 9:58 a.m. in Singapore. China's yuan sinking beyond 7 per dollar on Monday for the first time in more than a decade fueled fresh offloading of equities in Korea, whose economy relies heavily on export.

Analysts have responded by cutting their earnings-per-share estimates for the next 12 months by 23% since the beginning of the year. The Kospi Index was volatile on Wednesday as futures on the S&P 500 Index fell as much as 0.6% as of 10:25 a.m. in Singapore after the Chinese central bank's daily yuan fixing was seen as slightly weaker than expected.

Technical indicators have started pointing to potential relief ahead. A pair of technical studies, DeMark's Combo indicator and relative strength index, may be signalling the rout in Korean stocks is nearing a turning point, so long as traders are willing to try and catch a falling knife.