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Seoul: Stocks, won fall over EU immigration policy, US-China tariff spat
[SEOUL] South Korea's Kospi stock index slumped about 2.5 per cent on Monday to its lowest close in nearly 14 months, as political risks heightened on immigration deals in the European Union (EU) and a private survey showed a slowdown in China's manufacturing sector growth. Tension between the world's top two economies is likely to rise ahead of a July 6 deadline when the United States is due to impose US$34 billion of tariffs on Chinese exports. Bond yields edged down.
German Interior Minister Horst Seehofer offered to step down from his position to party colleagues late on Sunday, adding uncertainty towards Chancellor Angela Merkel's government, while he pushed forward to restrict the number of migrants entering the bloc.
China's manufacturing sector growth ebbed in June as firms faced rising input costs whereas export orders declined amid intensifying trade tensions with the United States, the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) showed on Monday. At 06:31 GMT, the Kospi was down 54.60 points, or 2.35 per cent, at 2,271.53. Market heavyweight Samsung Electronics fell more than 2.4 per cent, while LG Electronics closed 4 per cent lower after hitting its lowest since October 2017.
Shares of cyclical material makers including steel slid on Chinese economic stagnation. Steel makers Posco and Hyundai Steel dropped more than 4 per cent each, while Daewoo Engineering & Construction fell 6.1 per cent to its lowest close since April.
Airline shares also plummeted on concerns over rising oil prices. Shares of Korean Air Lines and its budget affiliate, Jin Air, fell 4.1 per cent and 6.3 per cent, respectively. The won was quoted at 1,120 per dollar on the onshore settlement platform, 0.49 per cent weaker than its previous close at 1,114.5. In offshore trading, the won was quoted at 1,119.02 per U.S. dollar, down 0.46 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,102.05 per dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.71 per cent, after US stocks ended the previous session with gains. Japanese stocks weakened 2.21 per cent. The Kospi is down around 5.7 per cent so far this year, and down by 5.39 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 387,650,000 shares and, of the total traded issues of 888, the number of advancing shares was 85. Foreigners were net buyers of 115,476 million won worth of shares. The US dollar has risen 4.94 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 1,125.17 on June 27, 2018.
In money and debt markets, September futures on three-year treasury bonds rose 0.03 points to 108.09. 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 2.131 per cent, higher than the previous day's 2.12 per cent.