Seoul: Stocks drop after Wall Street slump

[SEOUL] South Korean shares fell more than 2 per cent on Tuesday, following a historic rout on Wall Street, on fears of the coronavirus that poses a major threat to economic growth and as actions from major central banks failed to encourage investors.

The Korean won weakened, while the benchmark bond yield fell.

By 0232 GMT, the benchmark Kospi fell 43.94 points, or 2.56 per cent, to 1,670.92, after dropping as much as 4.5 per cent to 1637.88 in early trade, the lowest since early-June 2010. The index has fallen 23.97 per cent so far this year.

Foreigners sold net 311.6 billion won (S$356.4 million) worth of shares on the mainboard.

Financial markets cratered on Monday with the S&P 500 tumbling 12 per cent, its biggest drop since "Black Monday" three decades ago, as a series of emergency central bank rate cuts globally only added to the recent sense of investor panic.

A plunge in local equities are tracking that from the United States and market volatility will remain high as the coronavirus risk persists, said Lee Won, an analyst at Bookook Securities.

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The country reported 84 new infections on Tuesday, bringing the total to 8,320.

After the onshore markets closed on Monday, the Bank of Korea slashed interest rates by 50 basis points to a record low, joining global central banks to soften the economic fallout.

The nation's vice-finance minister said on Tuesday the widening fallout from the coronavirus outbreak may lead to unprecedented economic and financial crisis for the country.

US President Donald Trump on Monday said the worst of the new coronavirus could be over by July or August, adding that a recession was possible.

The won was quoted at 1,240.9 per US dollar on the onshore settlement platform, 1.2 per cent lower than its previous close of 1,226. In early trade, the currency weakened to its lowest since Feb 29, 2016.

In offshore trading, the won was quoted at 1,240.4 per US dollar, down 0.6 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,234.7 per US dollar.

In money and debt markets, March futures on three-year treasury bonds rose 0.28 points to 111.58.

The most liquid three-year Korean treasury bond yield fell by 9.5 basis points to about 1 per cent, while the benchmark 10-year yield fell by 2.4 basis points to 1.5 per cent.

REUTERS