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Seoul: Shares fall most in nearly 7 years; won declines sharply

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[SEOUL] South Korean stocks plunged 4.4 per cent on Thursday, the sharpest in almost seven years, and hit their lowest since April 2017, as a rout on Wall Street rippled through Asian markets.

The benchmark Kospi index declined 98.94 points to 2,129.67, extending losses into an eighth session. Samsung Electronics and SK Hynix , the country's two biggest firms, dropped 4.8 per cent and 1.9 per cent, respectively, pulling the KOSPI technology sub-index down 4.5 per cent.

Nine of the top 10 Kospi stocks closed in negative territory, while Naver was under a trading halt ahead of a stock split. Celltrion , the country's third-largest company, slumped 5.2 per cent, while fourth-largest Samsung Biologics tumbled 4.3 per cent.

Trading volume on the Kospi index was 404,316,000 shares and, of the total traded issues of 898, the number of advancing shares was mere 23. The Junior KOSDAQ index slumped 5.4 per cent, to its weakest close since November 2017. The fall was in line with Asian stocks. MSCI's broadest index of Asia-Pacific shares outside Japan was down 4 per cent. "The current downturn seems excessive," said Kim Jae-hong, CIO of PTR Asset Management based in Seoul.

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"As the US policy rate hikes motions are expected to cool down, South Korean markets would stabilise," he said, noting the downside risks for South Korean markets would be eased gradually. Foreigners were net sellers of 486,516 million won worth of shares on Thursday. The won was quoted at 1,144.4 per dollar on the onshore settlement platform , 0.91 per cent weaker than its previous close at 1,134.

The losses did not spill over to the bond market. December futures on three-year treasury bonds rose 0.19 points to 108.39.

"This is a US equity problem, and its decade-long outperformance is overdue a major correction," said Peter Park, head of securities management at South Korea's IBK Insurance.

"Further short-term equity pain may well be unavoidable in South Korea as foreigners are selling, but the bond market is holding up."

The Korean three-month Certificate of Deposit benchmark rate was quoted at 1.65 per cent, while the benchmark three-year Korean treasury bond yielded 2.011 per cent, lower than the previous day's 2.06 per cent.

REUTERS

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