Seoul: Shares drop on recession worries; won falls most in 16 months

SOUTH Korean shares dropped 1.8 per cent on Wednesday (Jun 29) as worries resurfaced about a recession from high inflation and monetary policy tightening. The won posted its worst daily performance in 16 months, while the benchmark bond yield was flat.

The benchmark Kospi ended down 44.1 points or 1.82 per cent at 2,377.99, snapping a 3-session rising streak.

Both in the US and South Korea, consumer confidence fell sharply in June amid worries about high inflation.

Recession worries after weak US data and fears of a big interest rate hike from the Bank of Korea due to rising inflation expectations weighed on the market, said Daishin Securities’ analyst Lee Kyoung-min.

Among heavyweights, technology giant Samsung Electronics and peer SK Hynix fell 2.36 per cent and 1.36 per cent respectively, tracking a sharp drop of the Philadelphia Semiconductor Index overnight.

LG Energy Solution lost 4.63 per cent after the battery maker said it would re-evaluate its investment plan for a standalone Arizona battery factory. Its parent company LG Chem dropped 7.02 per cent.

Hyundai Motor and Kia fell 5.65 per cent and 6.11 per cent, respectively, after German authorities raided the automakers over allegations that they put over 210,000 diesel vehicles with suspected illegal defeat devices onto the road.

Kakaobank declined 7.85 per cent to its lowest-ever close since the August 2021 listing after a local brokerage’s unusual “underperform” rating.

Foreigners were net sellers of 226.1 billion won (S$241.7 million) worth of shares on the main board.

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The won was last quoted at 1,299 per dollar on the onshore settlement platform, 1.2 per cent lower than its previous close. The currency posted its worst daily performance since Feb 26, 2021.

In money and debt markets, September futures on 3-year treasury bonds rose 0.08 point to 103.46 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 1.4 basis points to 3.553 per cent, while the benchmark 10-year yield fell by 0.3 basis point to 3.661 per cent. REUTERS