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Seoul: Stocks fall as trade hopes wane

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South Korean shares shed more than 1 per cent on Wednesday after US President Donald Trump's remarks undermined optimism for a quick initial trade deal with China. The won and the benchmark bond yield also fell.

[SEOUL] South Korean shares shed more than 1 per cent on Wednesday after US President Donald Trump's remarks undermined optimism for a quick initial trade deal with China. The won and the benchmark bond yield also fell.

By 0214 GMT, the Seoul stock market's main KOSPI fell 22.23 points, or 1.07 per cent, to 2,061.84. The index hit the lowest since Oct 21.

The trading volume during the session on the KOSPI index was 146.25 million shares and, of the total traded issues of 904, the number of advancing shares was 172.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.64 per cent, after US stocks shrank overnight. Japanese stocks fell 1.06 per cent.

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The KOSPI has risen 1.29 per cent so far this year, but lost 0.2 per cent in the previous 30 trading sessions.

Mr Trump said that a trade agreement with China might have to wait until after the US presidential election in November 2020, denting hopes of a resolution soon to a dispute that has weighed on the world economy.

Dampening sentiment further, China said it resolutely opposed the US House of Representatives' bill requiring the Trump administration to toughen its response to what the bill called China's crackdown on ethnic minorities in the western region of Xinjiang.

Foreigners were net sellers of around 200 billion won (S$228.5 million) worth of shares on the main board.

While investor sentiment was already dampened by Mr Trump's remarks, the KOSPI extended its losses after China depreciated its currency against the US dollar, said Seo Sang-young, an analyst at Kiwoom Securities.

Following China's move, the won also extended its losses, being quoted at 1,193.6 per US dollar on the onshore settlement platform, 0.54 per cent lower than its previous close at 1,187.2. 

In offshore trading, the won was quoted at 1,193.1 per US dollar, down 0.3 per cent from the previous day, while in non-deliverable forward trading, its one-month contract was quoted at 1,191.2 per dollar. The won has lost 6.5 per cent against the US dollar so far this year.

In money and debt markets, December futures on three-year treasury bonds rose 0.08 point to 110.32, while the 3-month Certificate of Deposit rate was quoted at 1.53 per cent in late afternoon trade.

The most liquid 3-year Korean treasury bond yield fell by 3.7 basis points to 1.425 per cent in late afternoon trade, while the benchmark 10-year yield fell by 6.7 basis points to 1.670 per cent.

REUTERS