Seoul: Shares fall over 1% after Fed chief’s comment; won hits 13-year low

SOUTH Korean shares closed more than 1 per cent lower after a volatile session on Thursday (Jun 23), as the US central bank chief acknowledged the possibility of a recession. The Korean won weakened below 1,300 per dollar for the first time since July 2009, while the benchmark bond yield fell.

The benchmark Kospi ended down 28.49 points or 1.22 per cent at 2,314.32 - the lowest close since Nov 2, 2020. It rose 0.79 per cent before reversing course to fall as much as 1.55 per cent.

US Federal Reserve Chair Jerome Powell said on Wednesday the central bank is not trying to engineer a recession to stop inflation, but acknowledged that it is "certainly a possibility".

Risks of Fed rate hikes leading to weaker demand for durable goods will be critical to manufacturing exporters like South Korea, said Cape Investment and Securities' analyst Na Jeong-hwan.

South Korea's finance minister said authorities would work to minimise any adverse impact from a weakening won and take steps to stabilise the foreign exchange market if necessary.

Among heavyweights, technology giant Samsung Electronics lost 0.35 per cent and peer SK Hynix dropped 2.17 per cent, while battery maker LG Energy Solution inched down 0.25 per cent.

Foreigners were net sellers of 296.3 billion won (S$315.3 million) worth of shares on the main board, extending their selling streak to a fifth session.

Of the total traded issues of 930 on the benchmark Kospi, only 77 shares advanced.

The won was last quoted 0.35 per cent lower at 1,301.8 per dollar on the onshore settlement platform, after hitting the lowest since Jul 14, 2009, at 1302.8.

In offshore trading, the won was quoted down 0.3 per cent at 1,301.4 per dollar, while in non-deliverable forward trading its 1-month contract was quoted at 1,300.2.

In money and debt markets, September futures on 3-year treasury bonds fell 0.07 point to 103.36 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 1.1 basis points to 3.569 per cent, while the benchmark 10-year yield fell by 3.2 basis points to 3.671 per cent. REUTERS



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