Seoul: Stocks fall on China growth target cut, weak U.S. data

[SEOUL] South Korea's Kospi stock index fell for the third straight session on Tuesday as China's cut in growth target and weaker-than-expected US construction data chilled investor sentiment amid uncertainty over the Sino-US trade deal. The South Korean won ended flat while bond yields edged up.

Chinese Commerce Minister Zhong Shan said on Tuesday trade talks with the United States have been difficult but that working teams from both countries are continuing with their negotiations.

While China has lowered its 2019 economic growth target at 6.0-6.5 per cent, from around 6.5 per cent last year, it offered more stimulus, including cuts in taxes and social security fees, increases in infrastructure investment and lending to small firms.

US construction spending unexpectedly fell in December as investment in both private and public projects dropped, leading economists to expect that the government will trim its economic growth estimate for the fourth quarter.

South Korea's February headline inflation rate grew a mere 0.5 per cent in annual terms, marking the lowest growth since August 2016.

The benchmark Kospi index ended down 11.43 points or 0.52 per cent at 2,179.23, extending its loss to a third session.

Shares of companies making masks and air purifiers rallied as fine dust blankets South Korea, while the government enforced emergency measures. Mask manufacturer Welcron Co Ltd closed up nearly 5 per cent.

The won was quoted at 1,125.5 per dollar on the onshore settlement platform, 0.05 per cent lower than its previous close at 1,124.9.

In offshore trading, the won was quoted at 1,125.1 per US dollar, nearly unchanged from the previous day, while in one-year non-deliverable forward trading its one-month contract was quoted at 1,124.0 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.16 per cent, after US stocks ended its previous session with losses. Japanese stocks fell 0.44 per cent.

The Kospi has risen 6.77 per cent so far this year, and gained 4.5 per cent in the previous 30 trading sessions.

The current price-to-earnings ratio is 12.10, dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.

Foreigners were net sellers of 156.8 billion won worth of shares on the mainboard.

The trading volume during the session on the Kospi index was 308.80 million shares and, of the total traded issues of 896, the number of advancing shares was 395.

The won has lost 0.9 per cent against the US dollar this year.

In money and debt markets, March futures on three-year treasury bonds fell 0.01 points to 109.14, while the three-month Certificate of Deposit rate was quoted at 1.89 per cent.

The most liquid three-year Korean treasury bond yield rose by 0.2 basis point to 1.836 per cent, while the benchmark 10-year yield fell by 0.1 basis point to 2.026 per cent.

REUTERS