Seoul: Stocks plunge most in 2 months on infection surge, Fed's gloom

[SEOUL] South Korean shares tumbled 3.7 per cent on Thursday, the sharpest fall in two months, as fears of rising domestic coronavirus infections persist, while a cautious outlook from the US Federal Reserve weighed on investor sentiment. The Korean won weakened, but the benchmark bond yield rose.

The benchmark Kospi closed down 86.32 points or 3.66 per cent to 2,274.22.

US stocks ended lower on Wednesday after the minutes of Fed's late-July meeting revealed its members are considering tweaks to monetary policy, while remaining concerned that the US economy's nascent recovery from the pandemic-induced recession faced an uncertain path.

South Korean health officials are struggling to contain an outbreak of the new coronavirus centred in the capital city of Seoul, as new cases levelled off but remained in the triple digits on Thursday.

Asian equities showed weaknesses as investors were disappointed at the Fed's minutes, which failed to meet the market expectations of liquidity supply, said Lee Young-gon, analyst at Hana Financial Investment.

Shares of Ssangyong Motor Co rose as much as 27 per cent after local media reported that US car distributor HAAH Automotive Holdings may submit a binding offer to acquire a stake in the South Korean automaker next month.

Foreigners were net sellers of 276.2 billion won (S$319.2 million) worth of shares on the main board.

The won closed trading at 1,186.9 per US dollar on the onshore settlement platform, 0.48 per cent lower than its previous close at 1,181.2.

In offshore trading, the won was quoted at 1,186.7 per US dollar, down 0.4 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,186.5.

The trading volume during the session in the Kospi index was 890.88 million shares. Of the total traded issues of 901, the number of advancing shares was 68.

In money and debt markets, September futures on three-year treasury bonds fell 0.03 point to 112.21, while the three-month Certificate of Deposit rate was quoted at 0.63 per cent.

The most liquid three-year Korean treasury bond yield rose by 0.8 basis point to 0.812 per cent, while the benchmark 10-year yield rose by 2.7 basis points to 1.373 per cent.

REUTERS