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South Korea: Stocks fall sharply; won volatile on currency side deal

[SEOUL] South Korean shares dropped more than 1 per cent in early trade on Wednesday, tracking sharp losses in US markets overnight, while the won showed high volatility as Seoul and Washington were reported to have had a currency side deal.

The United States and South Korea have reached an agreement on a revised trade pact that includes a side deal aimed at deterring competitive currency devaluation by Seoul and provides relief from US tariffs on steel, senior Trump administration officials said on Tuesday.

The local currency also received some support after China said North Korean leader Kim Jong Un pledged to denuclearise the Korean peninsula during an historic meeting in Beijing.

South Korea's Kospi stock index slumped over 1 per cent on Wednesday. The Korean won edged up, erasing early losses, while bond yields fell.

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At 02.16 GMT, the Kospi was down 31.18 points, or 1.27 per cent, at 2,420.88. Market heavyweight Samsung Electronics fell more than 3 per cent soon after the opening.

Shares of steelmakers were mostly down amid worries that demand from auto manufacturers would decline due to the revised trade pact with the United States, with the sub-index for iron, steel and metal down 2.1 per cent.

North Korea-exposed shares, however, extended gains on Kim Jon Un's China visit, with Shinwon and In The F up 5.8 per cent and 4.9 per cent, respectively.

The won was quoted at 1,068.6 per dollar on the onshore settlement platform, 0.16 per cent firmer than its previous close at 1,070.3.

In offshore trading, the won was quoted at 1,068.68 per US dollar, up 0.51 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,055.65 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.74 per cent, after US stocks ended the previous session with sharp losses.

Japanese stocks weakened 1.62 per cent.

The Kospi is down around 0.6 per cent so far this year, and down by 1.85 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 267,938,000 shares, and of the total traded issues of 883, the number of advancing shares was 235.

Foreigners were net sellers of 186,790 million won worth of shares.

The US dollar has risen 0.22 per cent against the won this year. The won's high for the year is 1,056.67 per dollar on Jan 14, 2018 and low is 1,098.4 on Feb 6, 2018.

In money and debt markets, June futures on three-year treasury bonds rose 0.07 points to 107.7.