The Business Times

Seoul: Shares rocked as FX volatility turns away foreign investors; won flat

Published Thu, Oct 2, 2014 · 03:08 AM

[SEOUL] South Korean shares extended their falls on Thursday, poised for a sixth-straight losing session as a volatile local currency and broad risk-off sentiments prompted offshore players to cut their exposure to risky, emerging market assets.

The Korea Composite Stock Price Index (KOSPI) was down 1.03 per cent at 1,971.04 points as of 0223 GMT, hovering just above a 5-month intraday low.

Shares slightly pared losses after South Korea's financial regulator said new measures to revitalize the stock market will be announced later this month.

"Foreign investors are alarmed at exchange rate-linked profit losses due to the steep decline in the won, and thin trading volume has added volatility to the wider market," said Kim Dae-joon, an analyst LIG Investment & Securites.

Foreigners offloaded a net 92.3 billion won (US$86.81 million) worth of KOSPI shares midway into morning trade.

Global equities have been rocked in recent sessions by the ongoing unrest in Hong Kong and uncertainty over Beijing's response, which is especially worrisome for trade-reliant South Korea that ships more than a quarter of its exports to China.

Cyclical shares sensitive to changes in Chinese demand fell across the board. Daewoo Shipbuilding & Marine Engineering fell 2.3 per cent while steelmaker POSCO slid 3.3 per cent.

Trading activity was choppy, with 128.4 million shares changing hands on the main bourse.

The KOSPI 200 benchmark of core stocks was down 1.21 per cent, while the junior KOSDAQ edged down 0.47 per cent.

Investors will be awaiting further cues from the European Central Bank's policy meeting, scheduled for later in the day.

The South Korean won was nearly unchanged as the recent dollar surge paused to catch its breath after breaking through key psychological resistance thresholds.

The local currency was quoted at 1,062.9 to the dollar as of 0223 GMT, compared to Wednesday's closing rate of 1,062.7 December futures on three-year treasury bonds fell 4 basis points to trade at 107.86. - Reuters

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