SEOUL: South Korean stocks tumbled 1.07 percent Monday as investors shunned risky assets out of fears that plunging crude oil prices will protract the global economic slowdown. The local currency sharply fell against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) lost 20.80 points to 1,927.82. Trade volume was moderate at 425.67 million shares worth 4.02 trillion won (US$3.39 billion), with losers far outnumbering winners 697 to 150.
“Investors view the sharp fall in prices of oil and other commodities as another precursor of the weakness in the global economy,” said Noh Jong-won, a researcher at Hi Investment & Securities.
On Friday, benchmark U.S. crude fell more than 3 percent to a fresh seven-year low after the International Energy Agency warned that the supply glut will continue well into next year, hammering stock markets worldwide. “Without positive leads out there, they have also been cautious, nervously awaiting the results of this week’s Fed meeting,” the analyst added.
The U.S. Federal Reserve is set to hold a two-day rate-setting meeting starting Wednesday (U.S. time), where the central bank is widely expected to raise the interest rate for the first time in nearly a decade.
Foreigners continued to offload local stocks extending their selling binge to a ninth consecutive day. They dumped a net 294.4 billion won of local shares. Large-cap tech firms and chemicals led the losses. Market bellwether Samsung Electronics dropped 1.79 percent to 1,261,000 won, and top chipmaker SK Hynix sank 2.85 percent to 29,000 won.
Amore Pacific, the No. 1 cosmetics maker, fell 0.37 percent to 401,500, and LG Chem went down 1.07 percent to 343,000 won. Refiners were also pummeled, with industry leader SK Innovation plunging 4.31 percent to 122,000 won and the country’s No. 3 refiner S-Oil shedding 3.33 percent to 72,500 won.
Auto shares, however, traded bullish on the back of the weaker local currency and hopes for better performances in the global market. Top carmaker Hyundai Motor rose 1.35 percent to 150,500 won, and its smaller affiliate Kia Motors surged 2.68 percent to 53,600 won after they posted a rosy sales target for next year.
The Korean won ended at 1,184.7 won against the greenback, down 5.2 won from Friday’s close. It marks the lowest since Sept. 30 when the figure came to 1,185.3. Analysts pointed out that the imminent rate hike in the U.S., coupled with a continued foreign sell-off, raised demand for the greenback.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 1.6 basis points to 1.732 percent and the return on the benchmark five-year government bonds shed 1.5 basis points to 1.928 percent.
