Seoul: Stocks, won extend losses on trade war concerns

[SEOUL] South Korea's Kospi stock index and the won slid on Tuesday as US President Donald Trump threatened new tariffs on Chinese products after Beijing decided to raise tariffs on US goods as a retaliation, worsening the trade spat between the world's two biggest economies. Bond yields dropped.

Meanwhile, South Korea's central bank governor Lee Ju-yeol said the commercial conflict between the two countries could have a sizeable impact on the Korean economy, adding the "uncertainties are high".

At 0631 GMT, the Kospi ended down 36.10 points or 1.52 per cent at 2,340.14, hitting the lowest since February. The overall large-cap stocks such as the nation's steelmaker Posco and Samsung Biologics closed 4.5 per cent and 6.5 per cent lower, respectively, while the market heavyweight Samsung Electronics rallied to end higher after a four-day losing streak.

South Korea's railway-related stocks and cement producers gained after the US and South Korea agreed to suspend a joint military drill scheduled for August, as it improved investor sentiment seeking benefit from any inter-Korean infrastructure projects.

The won was quoted at 1,109.1 per dollar on the onshore settlement platform, 0.39 per cent weaker than its previous close at 1,104.8, and extending losses into a fifth day session hitting the lowest since November 2017.

In offshore trading, the won was quoted at 1,108.33 per US dollar, down 0.54 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,092.25 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.78 per cent, after US stocks ended the previous session with losses. Japanese stocks weakened 1.77 per cent.

The KOSPI is down around 3.7 per cent so far this year, and lost 5.53 per cent in the previous 30 days. 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 600,234,000 shares and, of the total traded issues of 888, the number of advancing shares was 137. Foreigners were net sellers of 181,000 million won worth of shares.

The US dollar has risen 3.95 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2, 2018, and low is 1,109.6 on June 19, 2018.

In money and debt markets, June futures on three-year treasury bonds rose 0.02 points to 108.06. The Korean three-month Certificate of Deposit benchmark rate was quoted at 1.65 per cent, while the benchmark three-year Korean treasury bond yielded 2.168 per cent, lower than the previous day's 2.18 per cent.

REUTERS