Seoul shares fall again, tank 6 pc on tech losses amid West Asia tensions
Seoul, July 16
Seoul shares again plummeted on Thursday, led by steep losses in technology heavyweights, as escalating tensions in the Middle East weighed on investor sentiment. The Korean won rose against the US dollar.
After opening 4.45 percent lower, the benchmark Korea Composite Stock Price Index (KOSPI) extended its losses to close at 6,820.60, down 463.81 points, or 6.37 percent from the previous session, after falling as low as 6,730.87.
The Korea Exchange, the country's bourse operator, activated a sell-side sidecar on the KOSPI for 20 minutes at around 9:10 a.m. after the benchmark index fell more than 5 percent, reports Yonhap news agency.
The decline came after the index surged 6.24 percent on Wednesday as softer-than-expected U.S. inflation data eased concerns about near-term Federal Reserve interest rate hikes.
Adding to investor jitters, the Bank of Korea (BOK) raised its benchmark interest rate by a quarter percentage point to 2.75 percent earlier in the day, the first increase in 3 1/2 years, to curb inflation amid escalating tensions in the Middle East.
The U.S. launched fresh strikes on Iran, escalating tensions in the Middle East and renewing concerns over potential disruptions to regional energy supplies.
"Profit-taking followed sharp gains in technology stocks a session earlier, while persistent concerns over the semiconductor industry kept the index under pressure," Kang Jin-hyeok, an analyst at Shinhan Securities Co., said.
Institutional and foreign investors sold a net 2.37 trillion won (US$1.6 billion) and 1.38 trillion won worth of shares, respectively, while retail investors bought a net 3.66 trillion won.
Technology stocks led the decline.
Market bellwether Samsung Electronics plunged 8.77 percent to 255,000 won, while rival chipmaker SK hynix tumbled 11.53 percent to 1,842,000 won.
Top automaker Hyundai Motor fell 2.07 percent to 425,000 won, while steelmaker POSCO Holdings slipped 0.95 percent to 311,500 won.
Among gainers, shipbuilder Hanwha Ocean rose 5.73 percent to 86,700 won, while leading beverage firm Hitejinro gained 2.47 percent to 14,910 won.
The Korean won was quoted at 1,480.4 won against the U.S. dollar at 3:30 p.m., up from 1,484.7 won the previous session.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 1.8 basis points to 3.848 percent, and the return on the benchmark five-year government bonds declined 1.3 basis points at 4.099 percent.
— IANS
Reader Comments
This is exactly why I moved my investments to fixed deposits last month. 😅 The volatility is insane! One day up 6%, next day down 6%. Even the BOK hiking rates after years shows central banks are panicking. But retail investors buying the dip - reminds me of our Indian mom-and-pop investors who always think "buy low"!
As someone who follows Korean markets for work, this is a classic case of overreaction. The US inflation data was actually good, but then the rate hike and Middle East news spooked everyone. Samsung and SK Hynix falling 8-11% is brutal though. Hope our Indian IT stocks don't follow suit tomorrow morning.
Ye toh aam baat hai ab. Politicians fighting, markets falling, common man paying the price. The sidecar mechanism is interesting though - at least they try to prevent free-fall. Wish our SEBI had something similar when Nifty drops 5% in a day! 😐
Interesting how retail investors were net buyers while institutions sold off. In India too, we see this pattern - retail often catches the falling knife. The geopolitical risk premium is real though. With US-Iran tensions and now rate hikes, it's a perfect storm for tech-heavy indices like KOSPI.
One positive: the Korean won strengthened against dollar. But 1,480 per dollar is still weak. As an NRI in Dubai, I feel the oil price impact directly. This whole Middle East situation is bad for everyone's pockets. 😔
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