Seoul: Shares hit 19-month low on faster Fed rate-hike worries

SOUTH Korean shares fell for a sixth straight session on Tuesday (Jun 14) to a 19-month low, weighed down by mounting fears of much faster monetary policy tightening in the US ahead of a Federal Reserve meeting this week. The Korean won touched its weakest level since March 2020, while the benchmark bond yield hit a more than 8-year high.

The benchmark Kospi ended down 11.54 points or 0.46 per cent at 2,492.97, after falling as much as 1.88 per cent in early trade. The index posted its lowest close since Nov 12, 2020.

Eroding inflation data and fast-changing views in financial markets on Monday have opened the door to a larger-than-expected 3-quarter-percentage point interest rate increase when Federal Reserve officials meet this week.

The market seemed to have over-reacted a bit in early trade before recovering some losses amid dip-buying sentiment, said Mirae Asset Securities’ analyst Seo Sang-young.

South Korea’s finance ministry and central bank said they would take necessary measures to stabilise financial markets if volatility increases.

Among heavyweights, technology giant Samsung Electronics fell 0.32 per cent while peer SK Hynix rose 0.1 per cent.

LG Energy Solution rose 2.77 per cent after the battery maker announced an investment plan of 730 billion won (S$789 million) to expand its production capacity.

Foreigners were net sellers of 273.2 billion won worth of shares on the main board.

The won was last quoted at 1,286.4 per dollar on the onshore settlement platform, 0.19 per cent lower than the previous session, after touching the lowest since Mar 19, 2020 at 1,292.5.

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Seoul: Shares post worst day in nearly 2 years on inflation shocks

In money and debt markets, June futures on 3-year treasury bonds fell 0.07 point to 104.07 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 7.8 basis points to 3.561 per cent, after touching the highest since late August 2011, while the benchmark 10-year yield rose by 5.2 basis points to 3.696 per cent, after hitting the highest since early December 2013. REUTERS