Seoul: Shares, won drop on US monetary tightening worries

SOUTH Korean shares and currency dropped on Wednesday (Sep 7), weighed by worries of more aggressive monetary tightening in the US after robust economic indicators, while the benchmark bond yield rose.

The benchmark Kospi ended down 33.56 points or 1.39 per cent at 2,376.46, marking its lowest close since Jul 19.

The US services industry picked up again in August for the second consecutive month amid stronger order growth and employment, sending US treasury yields and the dollar higher.

Dip-buying sentiment was seen weak ahead of US Federal Reserve officials’ scheduled speeches and next week’s inflation data, said Seo Jung-hun, analyst at Samsung Securities.

Among heavyweights, technology giant Samsung Electronics dropped 1.93 per cent and peer SK Hynix lost 1.53 per cent, but battery maker LG Energy Solution rose 0.93 per cent.

Foreigners were net sellers of shares worth 488.9 billion won (S$496.7 million) on the main board, extending their sell-off to a fifth straight session.

The won ended 0.9 per cent at 1,384.2 per dollar on the onshore settlement platform, after falling as much as 1.2 per cent to its weakest since early April 2009 at 1,388.4.

The currency fell for a fifth consecutive session, but trimmed some of the early losses after the central bank’s verbal intervention that said its recent decline was too fast, considering economic fundamentals.

The country’s finance minister also said on Wednesday that increasing uncertainty in the currency market is undesirable and authorities are closely monitoring it for any herd-like behaviour.

SEE ALSO

Seoul: Shares recover after 3 sessions of losses

In money and debt markets, September futures on 3-year treasury bonds fell 0.03 point to 103.61 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 1.6 basis points to 3.699 per cent, while the benchmark 10-year yield rose by 5 basis points to 3.76 per cent. REUTERS