Seoul: Stocks post longest losing streak in 9 months, bond yields drop

SOUTH Korean shares closed lower on Wednesday (May 11) and logged their longest losing streak in 9 months, although losses were limited by Chinese stocks’ sharp rise amid cautious investors awaiting US inflation data due later in the day.

The Korean won ended little changed after hitting a new 26-month low, while benchmark bond yield dropped as market sentiment was boosted by a likelihood that there would be few, if any, bond issuance to finance the country’s extra budget.

The benchmark Kospi closed down 4.29 points, or 0.17 per cent, to 2,592.27, after falling as much as 0.67 per cent. The index fell for a seventh straight session and marked the longest losing streak since mid-August 2021.

April inflation data in the US is due at 12.30 GMT, with hopes that the consumer prices may have peaked out, while China’s producer inflation rose at the slowest pace in a year.

If inflation indeed peaks out, the stock market may gain some near-term strength, but sustainability will still be in question, said Kiwoom Securities’ analyst Kim Sae-hun.

South Korea’s exports for the first 10 days of May jumped 28.7 per cent from the same period a year earlier, but imports grew at a faster pace, bringing the trade balance to a US$3.72 billion deficit.

South Korea’s new finance minister indicated on Wednesday the government would issue few bonds, if any, to fund an upcoming supplementary budget aimed at defraying losses at small businesses due to Covid-19 restrictions.

Among heavyweights, technology giant Samsung Electronics ended flat, while peer SK Hynix rose 0.45 per cent. Battery maker LG Energy Solution fell 0.51 per cent.

Foreigners were net sellers of 288 billion won (S$313.5 million) worth of shares on the main board.

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The won was last quoted 0.09 per cent higher at 1,275.3 per dollar on the onshore settlement platform, after hitting a 26-month low of 1280.2.

In offshore trading, the won was quoted at 1,275.1 per dollar, up 0.1 per cent, while in non-deliverable forward trading, its 1-month contract was quoted at 1,275.2.

In money and debt markets, June futures on 3-year treasury bonds rose 0.32 point to 105.46 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield fell by 9.5 basis points to 2.951 per cent, while the benchmark 10-year yield fell by 11.2 basis points to 3.291 per cent. REUTERS