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Seoul: Shares choppy as growth woes check sentiment; won edges down
[Seoul] South Korean shares were flat in a choppy morning session on Wednesday, as investors were reluctant to chase the market higher in an environment of heightened worries about the global economy.
The Korea Composite Stock Price Index (KOSPI) tacked on 0.03 per cent at 1,929.88 points as of 0210 GMT, erasing most of the 0.5 per cent gain seen in the opening minutes of trade.
Share market reaction was muted after the Bank of Korea cut its policy rate for the second time in three months, in line with expectations, as policymakers sought to bolster a fragile recovery.
"The rate cut was already factored into the market, and although the government continues to promise further supportive policies, investors remain cautious until they these steps being implemented," said Kim Yong-goo, an analyst at Samsung Securities.
Foreign investors were net sellers of South Korean equities for the 9th straight session, offloading a net 110.3 billion won (US$103.49 million) of shares by late morning.
"Offshore players have sold nearly 3 trillion won worth of net shares over the last month and this is likely the end of that selling cycle with the KOSPI being undervalued as it is right now," Mr Kim said.
"But the problem is that at the moment, investors don't have any strong motivation to buy either," he added.
Global growth concerns have triggered a selloff in world equities in the past week, and more weak data from Germany and Britain overnight kept investors on edge.
And earlier on Wednesday data showed China's annual consumer inflation eased to 1.6 per cent in September against expectations of 1.7 per cent, adding to concerns the economy continues to lose momentum despite a raft of stimulus measures.
Traditional defensive plays were sought out by investors, with consumer staples outperforming the broader market.
Tobacco products maker KT&G rose 2 per cent while shares in cosmetics firm LG Household & Healthcare soared 5.4 per cent.
Airline shares rallied on the prospect of lower jet fuel costs as the price of Brent crude marked its biggest daily fall in more than three years on Tuesday.
Korean Air, the nation's largest passenger carrier, climbed more than 4 per cent while Asiana Airlines gained 2.8 percent.
Shares in LG Display, a major screen supplier for Apple, soared 3.5 per cent ahead of an October 16 event where the silicon valley giant is expected to unveil new iPads, according to technology website Re/Code, citing sources.
The South Korean won edged lower, as the broad risk-off mood triggered safe-haven bids for the dollar.
The local currency was quoted at 1,066.0 to the dollar as of 0210 GMT, compared to Tuesday's session close of 1,064.5.
December futures on three-year treasury bonds added 14 basis points to 107.79.