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[SEOUL] South Korean shares slumped more than one per cent on Friday morning, as Switzerland's unexpected decision to remove its currency cap triggered a wave of volatility in financial markets worldwide.
The Swiss franc's return to a free-floating currency on Thursday sent global markets into turmoil, compounding jitters over plunging commodity prices and slowing global growth.
The Korea Composite Stock Price Index (KOSPI) was down 1.21 per cent at 1,891.00 points as of 0200 GMT.
Broad declines were seen all across the main board, with 16 out of 17 industry sub-sectors tracked by the bourse operator languishing in negative territory while declining shares outnumbered winners nearly 3 to 1.
Offshore investors were poised for a fifth-straight selling session, having dumped a net 233.2 billion won (US$216.55 million) worth of KOSPI shares by mid-morning.
GS Engineering & Construction bucked wider trends to gain 1.5 per cent after it won a US$2.6 billion construction deal in Venezuela to build a gas plant.
Shares in Hyundai Motor pared earlier losses, down 1.7 per cent after a South Korean court ruled partially in favour of the automaker in a wage dispute with its workers.
The KOSPI 200 benchmark of core stocks fell 1.37 per cent while the junior, small-cap heavy KOSDAQ edged 0.35 per cent lower.
The South Korean won rose against the dollar on Friday, tracking a sharp rally in the Japanese yen on safe-haven bids although trimming earlier gains as broad risk-off sentiments weighed.
The yen/won cross-rate was sitting at 9.2587 as of 0200 GMT, pulling further away from a six-year low.
A stronger yen gives investors more flexibility in making bullish bets on the won as it reduces the risk of intervention by financial authorities to keep the local currency competitive.
"The won's movement is being dictated by the yen/dollar exchange rate and any moves here could cause positions to turn on a dime, so investors must be careful of volatility," said Son Eun-jeong, a foreign exchange analyst at Woori Futures.
The local currency was quoted at 1,077.0 to the dollar as of 0200 GMT, compared with 1,083.3 seen at the end of Thursday's session.
March futures on three-year treasury bonds added 13 basis points to trade at 108.60.