Seoul: Shares fall on recession fears

SOUTH Korean shares fell on Monday (Jul 4) as investors feared that rising interest rates to combat inflation would trigger an economic slowdown, with many bracing for a US recession next year. The South Korean won strengthened, while the benchmark bond yield rose.

The benchmark Kospi fell 5.08 points, or 0.22 per cent, to 2,300.34 as at 06:30 GMT.

Among the heavyweights, technology giant Samsung Electronics rose 1.6 per cent and peer SK Hynix rose 1.8 per cent, while battery maker LG Energy Solution fell 0.1 per cent.

South Korean shares, like Taiwanese stock markets, are sensitive to cyclical momentum in the economy and are reacting to recession fears, said Seo Jung-hun, an analyst at Samsung Securities.

On Friday, US manufacturing activity slowed more than expected in June, with a measure of new orders contracting for the first time in 2 years, signs that the economy was cooling amid aggressive monetary policy tightening by the Federal Reserve.

South Korea’s finance ministry and central bank said on Monday they had agreed to cooperate in minimising adverse risks of rising interest rates on vulnerable households and businesses.

Foreigners were net sellers of 140.5 billion won (S$151.2 million) worth of shares on the main board.

The won was quoted at 1,297.1 per dollar on the onshore settlement platform, 0.02 per cent higher than its previous close at 1,297.3.

In offshore trading, the won was quoted at 1,296.6 per dollar, up 0.2 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,295.6.

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The Kospi has plunged 22.75 per cent this year, and lost 12.2 per cent in the previous 30 trading sessions.

The trading volume during the session in the Kospi index was 461.97 million shares. Of the total traded issues of 925, the number of advancing shares was 188.

The won has lost 8.3 per cent against the dollar this year.

In money and debt markets, September futures on 3-year treasury bonds rose 0.07 point to 103.93.

The most liquid 3-year Korean treasury bond yield rose by 0.3 basis point to 3.441 per cent, while the benchmark 10-year yield rose by 1.0 basis point to 3.499 per cent. REUTERS