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Seoul: Stocks slip on fragile growth outlook, Japan's export curbs

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[SEOUL] South Korea's Kospi stock index shrank more than 1 per cent on Wednesday as investors fretted over grim growth outlook and Japan's export curbs effective from Thursday, sending shares of major chipmakers down. The South Korean won and the benchmark bond yield fell.

The Seoul stock market's main Kospi closed down 26.00 points, or 1.23 per cent, at 2,096.02, falling for a fourth straight session.

South Korea cut this year's economic growth target to what would be a seven-year low as the prolonged US-China tariff war hit global demand for the export powerhouse's manufactured goods. The government now aims to achieve growth of between 2.4 per cent and 2.5 per cent this year, slower than the 2.6 per cent to 2.7 per cent range seen earlier.

A South Korean central bank board member said the general conviction that the local economy would rebound in the second half of the year was weakening, adding to growing concerns about the outlook.

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South Korea's major chipmakers, Samsung Electronics and SK Hynix, lost 1.8 per cent and 3.2 per cent, respectively, after analysts saw Japan's export curbs would put pressure on the firms.

Japan will tighten curbs on exports of high-tech materials used in smartphone displays and chips to South Korea amid a growing dispute over South Koreans forced to work for Japanese firms during World War II.

Ahead of the export regulations from Thursday, risk-off mood heightened, said Na Jong-hwan, an analyst at DS Investment & Securities. The finance ministry's revised forecast is broadly in line with analysts' views, he added.

Foreigners were net sellers of 109.6 billion won worth of shares on the main board.

The won was quoted at 1,171.3 per dollar on the onshore settlement platform, 0.45 per cent lower than its previous close at 1,166.0.

In offshore trading, the won was quoted at 1,170.7 per US dollar, down 0.4 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,169.2 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.49 per cent, after US stocks closed up. Japanese stocks fell 0.53 per cent.

The Kospi has risen 2.69 per cent so far this year, and gained 3.2 per cent in the previous 30 trading sessions.

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

The trading volume during the session on the Kospi index was 510.19 million shares and, of the total traded issues of 895, the number of advancing shares was 200.

The won has lost 4.7 per cent against the U.S dollar so far this year.

In money and debt markets, September futures on three-year treasury bonds rose 0.13 points to 110.53, while the three-month Certificate of Deposit rate was quoted at 1.78 per cent.

The most liquid three-year Korean treasury bond yield fell by 3.1 basis points to 1.433 per cent, while the benchmark 10-year yield fell by 4.8 basis points to 1.540 per cent. 

REUTERS