Seoul: Stocks hit near 1 1/2-year low on rising US yields, China lockdowns

SOUTH Korean shares fell over 1 per cent on Monday (May 9) to their lowest in nearly 1 1/2 years, with risk appetite dampening across Asian markets as higher US Treasury yields make bonds more attractive amid China’s extended lockdown measures and the Ukraine crisis.

Bond yields move inversely to their prices. The Korean won hit its lowest in more than 2 years, while the benchmark bond yield fell.

The benchmark Kospi ended down 33.70 points, or 1.27 per cent, at 2,610.81. The index fell for a fifth session and marked the lowest close since Nov 30, 2020.

China tightened lockdown measures in Shanghai over the weekend, while Russia will celebrate Victory Day on Monday with a possibility of declaring war on Ukraine.

China, which is neighbouring South Korea’s biggest trading partner, saw its export growth slowed to single digits, the weakest in almost 2 years, while imports barely changed in April as tighter and wider Covid-19 curbs halted factory production and crimped domestic demand.

The stock market’s recent weakness reflected not only the US monetary tightening, but also concerns over global economic slowdown, with heavier lockdown measures in China intensifying supply chain woes, said Mirae Asset Securities’ analyst Seo Sang-young.

Among the heavyweights, technology giant Samsung Electronics fell 0.6 per cent while peer SK Hynix was flat. Battery maker LG Energy Solution dropped 1.87 per cent.

Foreigners were net sellers of 226.5 billion won (S$247.4 million) worth of shares on the main board.

The won was last quoted at 1,274 per dollar on the onshore settlement platform, 0.1 per cent lower than its previous close at 1,272.7, marking the lowest close since Mar 19, 2020.

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Seoul: Stocks, won fall as Wall Street slides; benchmark bond yield drops

In offshore trading, the won was quoted at 1,274.2 per dollar, down 0.3 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,275.

In money and debt markets, June futures on 3-year treasury bonds rose 0.24 point to 105.08 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield fell by 6.2 basis points to 3.079 per cent, while the benchmark 10-year yield fell by 2.8 basis points to 3.409 per cent. REUTERS