Seoul: Shares fall on US yield spike, China policy tightening woes

[SEOUL] South Korean shares ended lower on Monday, reversing early gains, as strong local exports data were offset by a spike in US Treasury yields and concerns about policy tightening in China. The won weakened, while the benchmark bond yield rose.

The benchmark Kospi closed down 27.87 points or 0.90 per cent at 3,079.75, after rising as much as 1.12 per cent in early trade.

Most heavyweights slid, with chip giant Samsung Electronics down 0.48 per cent, while internet giant Naver and LG Chem tumbled 2.89 per cent and 2.66 per cent, respectively. Samsung's peer SK Hynix, however, rose 2.63 per cent.

South Korea's exports during the first 20 days of February expanded 16.7 per cent from a year earlier, data showed on Monday, faster than a 10.5 per cent rise during the Jan 1-20 period, thanks to a sales boost in major products and strong global demand.

US 10-year Treasury yields spiked on expectations that massive government stimulus would lead to higher growth and inflation, while there are mounting speculation that the Chinese authorities may begin to adopt a tighter policy stance.

The Bank of Korea is expected to keep interest rates at a record low on Thursday, as a sluggish labour market keeps policymakers under pressure.

Foreigners turned net sellers of 315.9 billion won (S$376.1 million) worth of shares on the main board.

The won ended at 1,110.4 per dollar on the onshore settlement platform, 0.41 per cent lower than its previous close at 1,105.9.

In offshore trading, the won was quoted at 1,109.4, while in non-deliverable forward trading its one-month contract was quoted at 1,109.2.

In money and debt markets, March futures on three-year treasury bonds fell 0.09 point to 111.48.

The most liquid three-year Korean treasury bond yield rose by 2.3 basis points to 1.020 per cent.

REUTERS