Seoul: Stocks log worst session since August 2020 as US rate hikes near

[SEOUL] South Korean shares logged their sharpest drop in almost a year and a half on Thursday (Jan 27) as investors fret over the Federal Reserve's plan to combat inflation with higher interest rates starting as early as March, while some sold LG Energy Solution shares at the trading debut. The Korean won weakened, while the benchmark bond yield rose.

The benchmark Kospi fell 94.75 points, or 3.5 per cent, to 2,614.49, the sharpest drop since Aug 20, 2020.

Among the heavyweights, technology giant Samsung Electronics fell 2.73 per cent and peer SK Hynix declined 3.4 per cent, while LG Chem fell 8.13 per cent and Naver slipped 3.19 per cent.

US Federal Reserve chairman Jerome Powell warned that inflation remains above the Fed's long-run goal and supply chain issues may be more persistent than previously thought.

Shares of LG Energy Solution jumped in their debut on Thursday after South Korea's biggest-ever initial public offering attracted bids worth US$13 trillion, making it the country's second-most valuable company.

Nuclear-armed North Korea fired what appeared to be 2 short-range ballistic missiles on Thursday, drawing condemnation from the US for what would be the sixth round of missile tests this month.

Foreigners were net sellers of 1,629.4 billion won (S$1.8 billion) worth of shares on the main board.

The won was quoted at 1,202.8 per dollar on the onshore settlement platform, 0.42 per cent lower than its previous close at 1,197.7.

In offshore trading, the won was quoted at 1,203.1 per dollar, down 0.5 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,203.6.

The Kospi has fallen 12.2 per cent so far this year, but lost 9.3 per cent in the previous 30 trading sessions.

The most liquid 3-year Korean treasury bond yield rose by 6.3 basis points to 2.219 per cent, while the benchmark 10-year yield rose by 3.9 basis points to 2.612 per cent. REUTERS