South Korea is the fourth largest exporter to Hong Kong with nearly 46 billion U.S. dollars of shipments last year. Only China, the U.S. and Vietnam exported more to the territory.
Hong Kong acts as a bridge between Korea and China, and Seoul's main export items, semiconductor chips, go through Hong Kong on their way to factories in China.
But analysts warn that if the city's anti-government demonstrations get worse, not only will they affect the financial markets, but they could also harm Korea’s exports.
And Hong Kong could face one more potential risk.
If Beijing directly intervenes in the crisis, the U.S. could revoke Hong Kong's special status, meaning Hong Kong would no longer be free from the tariffs that the U.S. places on China.
"If Hong Kong loses its preferential treatment, not only would Hong Kong stocks plunge,the stock prices in China may also take a nosedive.
And as South Korea is intricately linked to Hong Kong in terms of trade, Seoul would also be directly affected in its exports to China and other Chinese territories."
With the U.S.-China trade spat and Japan's export restrictions already causing uncertainty for Seoul's economy,… anxiety is growing among South Korean investors who have put money into Hong Kong stocks.
According to Bloomberg, Hong Kong's stock market plunged as the protests escalated, losing 622 billion U.S. dollars since July.
Although South Korea's Financial Supervisory Service says the drop is not big enough for those who invested in Hong Kong equity-linked securities to lose their money, it plans to hold a conference with related associations to check risk factors including Hong Kong's sinking stocks.
Kim Jae-hee, Arirang News.