Seoul: Shares, won sink on global economy, North Korea jitters

[SEOUL] South Korean shares and the won fell sharply on Friday in market turmoil over the state of the world economy and an escalation of tensions with North Korea.

The Korea Composite Stock Price Index (KOSPI) fell 2 per cent to 1,876.03 points. During the week, it lost 5.4 per cent for a fifth consecutive weekly decline - the longest losing streak since late May 2011.

The won currency dropped 0.8 per cent to end onshore trade at 1,195.0 per dollar as tensions with North Korea put an additional drag on trading sentiment already hurt by the slowing Chinese economy.

North and South Korea exchanged fire across their border on Thursday and North Korean leader Kim Jong Un ordered his troops onto a war footing from 5 pm on Friday.

Increased tensions between the two, which remain technically at war, also lifted the credit default swap (CDS) premium on 5-year South Korean sovereign debt by nearly 10 basis points to 75.5 basis points on Friday, a near 2-year high.

It will now cost US$75,500 to insure against default on $10 million worth of debt versus around US$50,000 at the start of the year.

REUTERS