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

SOUTH Korean shares on Monday (Jun 13) fell 3.5 per cent, marking their biggest fall in 22 months, on intensified inflation fears after US CPI data. The country’s currency and treasury bonds also slumped.

The benchmark Kospi ended down 91.36 points or 3.52 per cent at 2,504.51. The index fell by the most since Aug 20, 2020, to its lowest close since Nov 13, 2021.

US consumer prices accelerated in May as gasoline prices hit a record high and the cost of food soared, leading to the largest annual increase in nearly 40 1/2 years, suggesting that the Federal Reserve could continue with its 50-basis-point interest rate hikes through September to combat inflation.

Weak consumer sentiment in the United States and a surge in gasoline prices added pressure on the stock market, said Mirae Asset Securities analyst Seo Sang-young, who expected the market to stabilise only after the US monetary policy meeting scheduled later in the week.

South Korea’s foreign exchange authority intervened in the currency market with a verbal warning on Monday, while the finance ministry said it would buy back more treasury bonds than planned to stabilise the bond market.

Among the heavyweights, technology giant Samsung Electronics fell 2.66 per cent and peer SK Hynix dropped 4.35 per cent, while battery maker LG Energy Solution lost 2.35 per cent.

Foreigners were net sellers of 495.1 billion won (S$534.8 million) worth of shares on the main board.

The won was last quoted at 1,284 per dollar on the onshore settlement platform, 1.18 per cent lower than its previous close, after hitting a session low of 1288.9.

In offshore trading, the won was quoted at 1,284.1 per dollar, down 0.4 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,283.4.

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Seoul: Stocks, won tumble ahead of US CPI data

In money and debt markets, June futures on 3-year treasury bonds fell 0.57 point to 104.37 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 19 basis points to 3.465 per cent, after hitting a 10-year high of 3.527 per cent. The benchmark 10-year yield rose by 13.3 basis points to 3.628 per cent, after touching a more than 8-year high of 3.705 per cent.