You are here

Seoul: Shares hit 2-month low on extended oil plunge; won edges down


[SEOUL] South Korean shares fell to their lowest level in 2 months on Monday as a prolonged decline in oil prices prompted jittery investors to cut their exposure to risk-sensitive assets.

The Korea Composite Stock Price Index (KOSPI) was down 0.6 per cent at 1,909.99 points as of 0140 GMT, a level not seen since Oct 17.

"The KOSPI will face a key test near the 1,900 level, with uncertainty reigning ahead of the US central bank rate meeting," said Lee Kyung-min, an analyst at Daishin Securities.

Market players are casting a wary glance at the US Federal Open Market Committee (FOMC) meeting set to begin on Tuesday, and on whether or not it will drop a long-running pledge to keep interest rates near zero for "a considerable time." In the meantime however, a relentless drop in oil prices has underscored growing concerns of deflation risks and slowing global growth, triggering a broad safe-haven flight.

The main bourse was down across the board, with 12 out of the 17 KRX industry sub-indices trading in negative territory while losing shares outnumbered winners nearly 2 to 1.

Risk-off sentiments weighed heavily on brokerage counters, as Samsung Securities slid 1.6 per cent while Woori Investment & Securities fell 1.4 percent.

Shares in discount retail chain E-Mart bucked the weaker trends to jump more than 6 per cent, after winning an appeal at the Seoul High Court to overturn measures requiring large discount stores to close on Sundays.

The KOSPI 200 benchmark of core stocks was down 0.6 per cent while the junior, small cap focused KOSDAQ edged up 0.3 per cent.

The South Korean won reversed modest early gains to trade slightly lower, as the dollar cut losses after a recent flurry of profit-taking on stronger-than-expected US retail data, bolstering the case for an early rate hike by the Fed.

"The market is still bullish on the dollar, but significant gains may be limited as investors continue to lock in on profits as they prepare to close their books at year-end," said Hong Seok-chan, an FX strategist at Daishin Economic Research Institute.

The won currency was quoted at 1,104.3 to the dollar as of 0140 GMT, compared to Friday's closing rate of 1,103.1.

December futures on three-year treasury bonds gained 7 basis points to trade at 108.20.