SEOUL: South Korean shares slipped to near 3-week lows on Tuesday morning due to energy stocks led by large fall on the back of an extended crisis in oil value and a sharp fell on Wall Street.
The Korea Composite Stock Price Index (KOSPI) was down 1.27 percent at 1,891.45 points as of 0125 GMT, the lowest level since Dec. 18 and slipping below the key psychological level of 1,900 points.
“The market is facing pressure from risk factors abroad as well as those closer to home with the fourth-quarter earnings season looming in the near horizon” said IBK Securities in a note.
Commodity-linked sectors suffered the brunt of the selloff. Hyundai Heavy Industries, South Korea’s largest shipbuilder, slid 3.7 percent while Lotte Chemical tumbled 5.5 percent.
Domestic shipyards are heavily reliant on orders for offshore drilling and storage vessels, but demand for these equipment slows down as low oil prices hurt earnings of energy firms.
Reflecting the gloom in global markets, declines were broad-based with all 17 major industrial sectors tracked by the main bourse languishing in negative territory. Losing shares outnumbered winners by more than two to one.
The KOSPI 200 benchmark fell 1.24 percent, while the junior, tech-heavy KOSDAQ was trading 0.54 percent lower.
The South Korean won edged higher as safe-haven bets on the yen supported a rebound in the Japanese currency, easing worries that the financial authorities could step in to check the won’s strength against the yen.
“Despite the dollar’s broad strength, market players are more sensitive to the yen’s movement… but the outflow of foreign capital from local stocks may cap further gains in the won,” said Hong Seok-chan, an FX strategist at Daishin Economic Research Institute.
Foreign investors dumped a net 143.3 billion won ($129.7 million) worth of shares by mid-morning, on track for the biggest one-day selloff by offshore players in nearly three weeks.
The local currency was quoted at 1,106.1 to the dollar as of 0125 GMT, compared to 1,109.9 at the end of Monday’s session.
March futures on three-year treasury bonds added 10 basis points to trade at 108.29.
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