Seoul: Stocks fall for 5th straight session as U.S.-China trade war escalates

[SEOUL] South Korean shares fell more than 1.5 per cent on Tuesday, marking the fifth consecutive session of losses, after Washington labelled Beijing as a currency manipulator. The South Korean won held steady, while the benchmark bond yield rose.

US Treasury Secretary Steven Mnuchin said on Monday the government had determined that China was manipulating its currency, and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing.

The Seoul stock market's main Kospi ended down 29.54 points or 1.52 per cent at 1,917.44, while the junior Kosdaq lost more than 3 per cent.

The index briefly turned higher in afternoon trade, after it fell as much as 2.8 per cent in the morning to its lowest intraday level since February 2016.

A trade war between the United States and China will be prolonged, as US President Donald Trump will keep hitting China in a bid to win re-election, said Byun Juno, chief of Eugene Investment & Securities research centre.

In the face of continued volatilities, local authorities said they would act quickly if volatility in South Korea's markets is excessive, while the financial regulator said the government would look into measures including tightening regulations on stock short-selling. Foreigners were net sellers of 608.0 billion won worth of shares on the main board, while local institutions were net buyers of more than one trillion won worth of shares.

The won snapped four straight sessions of declines, with currency dealers citing likely intervention by authorities to curb the currency's weakness.

The won was quoted at 1,215.3 per dollar on the onshore settlement platform, steady from its previous close at 1,215.3. In offshore trading, the won was quoted at 1,214.8 per US dollar, up 0.2 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,213.9 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.94 per cent, after US stocks closed down. Japanese stocks fell 0.65 per cent.

The Kospi has fallen 6.06 per cent so far this year, and lost 8.4 per cent in the previous 30 trading sessions.

The current price-to-earnings ratio is 12.10, the dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.

The trading volume during the session in the Kospi index was 729.38 million shares and of the total traded issues of 890, the number of advancing shares was 158.

The won has lost 8.2 per cent against the US dollar so far this year.

In money and debt markets, September futures on three-year treasury bonds rose 0.03 point to 111.29, while the three-month Certificate of Deposit rate was quoted at 1.49 per cent.

The most liquid three-year Korean treasury bond yield rose by 0.2 basis point to 1.174 per cent, while the benchmark 10-year yield rose by 1.6 basis points to 1.268 per cent.

REUTERS