The Business Times

Seoul: Shares fall to 3-week low, won erases gain on China data

Published Wed, Dec 10, 2014 · 03:16 AM
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[SEOUL] The South Korean won was nearly flat on Wednesday, surrendering early gains after China's November inflation pace was lower than expected, adding to worries of a slowdown in South Korea's largest export destination.

The won was quoted at 1,108.0 to the dollar as of 0210 GMT, compared to Tuesday's close of 1,107.8.

The local currency rose at the session's start, peaking at 1,103.0 as investors took profits on the dollar following its recent surge.

The rise proved fleeting after data at 0130 GMT showed China's consumer inflation slowing to a five-year low in November, wiping out the won's initial gains.

"Investors are clearing some overloaded long dollar positions but in terms of the big picture, the bullish forecasts for the greenback have not changed," said Hong Seok-chan, an FX strategist at Daishin Economic Research Institute.

Some support was to be found on safe-haven bids in the yen , triggered by nagging global growth concerns and renewed uncertainty about Greece's political future, sending the Japanese currency soaring as much as 2 per cent against the dollar on Tuesday.

The yen's sharp rebound relieved some of the pressure on the won, with the yen/won cross rate sitting at 9.2455, further away from a six-year low seen on Monday.

South Korean authorities have repeatedly stressed that a strong local currency relative to the yen hurts their exporters'ability to compete with Japanese rivals, placing investors on guard over possible market intervention.

Worries over slowing Chinese growth also weighed on South Korean shares, with the main bourse slumping to its weakest intraday level in three weeks.

The Korea Composite Stock Price Index (KOSPI) was down 0.91 per cent at 1,953.07 points at 0210 GMT.

The double squeeze of a sluggish Chinese demand outlook and falling oil prices took the heaviest toll on energy and petrochemical counters.

Lotte Chemical tumbled 10.3 per cent and LG Chem dropped 3.5 per cent.

Shares in Asiana Airlines rose 4.4 per cent, helped by lower fuel prices.

Rival carrier Korean Air, the subject of online complaints after an executive forced a crew member off a plane over how macadamia nuts were served, was up less than 1 percent.

December futures on three-year treasury bonds added 10 basis points to trade at 108.04.


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