Seoul: Stocks fall on worries over partial lifting of short-selling ban

[SEOUL] South Korean shares closed lower on Monday as upbeat trade data was outweighed by foreign investors reducing their positions on worries over the lifting of a short-selling ban.

Both the won and the benchmark bond yield fell.

The benchmark Kospi closed down 20.66 points or 0.66 per cent at 3,127.20, extending losses to a fifth straight session.

Foreigners were net sellers of 441.3 billion won (S$524.06 million) worth of shares on the main board.

South Korea partially resumed stock short-selling on Monday for those on Kospi 200 or Kosdaq 150, ending a 14-month ban imposed to protect retail investors from pandemic-induced volatility.

"Volatility in sectors with high valuation pressure may increase following the resumption of short-selling," said Kiwoom Securities' analyst Han Ji-young.

"But the lifting of the ban can help prevent excessive bubbles in certain sectors and may lead to greater inflow of foreign investment in the long run."

Biopharmaceutical and battery sectors were most affected after the resumption. Among heavyweights, battery maker LG Chem dropped 2.83 per cent, while biopharmaceutical firm Celltrion tumbled 6.20 per cent.

That pushed investors to overlook South Korean exports data that showed an expansion at the fastest pace in over a decade in April, while another set of data showed factory activity expanded for a seventh straight month.

The won was quoted at 1,124.0 per dollar on the onshore settlement platform, down 1.04 per cent.

In offshore trading, the won was quoted at 1,123.1, while in non-deliverable forward trading, its one-month contract was quoted at 1,123.6.

The most liquid three-year Korean treasury bond yield rose by 0.7 basis point to 1.148 per cent, while the benchmark 10-year yield fell by 0.2 basis point to 2.126 per cent.

REUTERS