Seoul: Stocks, won fall on escalating US-China trade tensions

[SEOUL] South Korea's KOSPI stock index and the won both collapsed on Wednesday as the escalating US-China trade conflict dented investor sentiment. Bond yields also fell.

President Donald Trump on Tuesday endorsed US Treasury Secretary Steven Mnuchin's approach saying the administration's plans are not just limited to China but would target all countries, after Mr Mnuchin and White House trade adviser Peter Navarro sent conflicting signals on Monday. US Defense Secretary Jim Mattis is currently visiting China for his first talks with Chinese officials including his counterpart Wei Fenghe to boost security dialogue over the intensifying US-China woes.

China's commerce ministry on Wednesday said it would assess the potential impact of U.S. investment regulations on Chinese firms without giving other details. At 0631 GMT, the Kospi was down 8.89 points or 0.38 per cent at 2,342.03. Market heavyweight Samsung Electronics rose 2 per cent, while steel maker Posco and chemical firm LG Chem dropped 3.2 per cent and 3.7 per cent, respectively.

Shares of Korean Air Lines and its budget carrier affiliate Jin Air plunged as much as 2.1 per cent and 5.9 per cent respectively, as chairman Cho Yang-ho will be summoned for questioning on Thursday by state prosecutors probing suspected tax evasion, embezzlement and breach of trust by members of the airline's founding family.

The won was quoted at 1,117.6 per dollar on the onshore settlement platform, 0.25 per cent weaker than its previous close at 1,114.8. In offshore trading, the won was quoted at 1,117.41 per U.S. dollar, up 0.01 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,101.05 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.67 per cent, after U.S. stocks ended the previous session with gains. Japanese stocks eased 0.31 per cent. The Kospi is down around 4.7 per cent so far this year, and down by 4.60 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 515,553,000 shares and, of the total traded issues of 889, the number of advancing shares was 223. Foreigners were net buyers of 74,969 million won worth of shares.

The US dollar has risen 4.79 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 the low is 1,120.01 on June 26, 2018. In money and debt markets, September futures on three-year treasury bonds rose 0.06 points to 108.02. The South Korean three-month Certificate of Deposit benchmark rate was quoted at 1.65 per cent, while the benchmark three-year Korean treasury bond yielded 2.128 per cent, lower than the previous day's 2.15 per cent.

REUTERS