Seoul shares tank 9 pc on tech losses amid Middle East tensions
Seoul, July 13
Seoul shares plunged 9 per cent on Monday as investors dumped technology stocks for profit-taking amid renewed tensions in the Middle East. The Korean won fell against the US dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 669.01 points, or 8.95 percent, to close at 6,806.93 after falling as low as 6,783.43, reports Yonhap news agency.
Trade volume was moderate at 469.86 million shares worth 39.8 trillion won (US$26.5 billion), with decliners far outnumbering gainers 713 to 179.
Institutions and foreigners sold a net 2.22 trillion won and 1.7 trillion won worth of shares, respectively, while individuals bought a net 3.9 trillion won.
After opening 0.85 percent lower, the KOSPI extended its losses, triggering a circuit breaker that temporarily halted trading of KOSPI-listed stocks for 20 minutes. It marked the seventh activation of the measure this year.
On Friday, U.S. stocks advanced, buoyed by South Korean chipmaker SK hynix's multibillion-dollar U.S. share offering. The Dow Jones Industrial Average gained 0.29 percent, while the tech-heavy Nasdaq Composite also rose 0.29 percent.
SK hynix's American depositary receipts (ADRs) on the Nasdaq closed at US$168 each, well above the offering price of $149.
Despite the successful U.S. market debut, SK hynix shares tumbled as investors took profits and shifted to the company's ADRs, analysts said.
Investor sentiment was also dampened by heightened uncertainty in the Middle East after the United States and Iran exchanged fresh strikes over the status of the Strait of Hormuz.
"The country's newly introduced single-stock leveraged exchange-traded funds linked to Samsung Electronics and SK hynix continued to fuel volatility in the stock market," Samsung Securities said in a research note.
Tech stocks led the decline. Market bellwether Samsung Electronics plunged 10.7 percent to 254,500 won, while its chipmaking rival SK hynix plummeted 15.37 percent to 1,845,000 won.
Top carmaker Hyundai Motor fell 2.95 percent to 444,000 won, and defence giant Hanwha Aerospace declined 3.21 percent to 936,000 won.
Among gainers, leading battery maker LG Energy Solution rose 0.77 percent, and leading refiner SK Innovation climbed 7.09 percent to 110,200 won.
The Korean won was quoted at 1,503.4 won against the U.S. dollar at 3:30 p.m., down 2 won from the previous session.
Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 4.1 basis points to 3.809 percent, and the return on the benchmark five-year government bonds climbed 3.3 basis points at 4.041 percent.
— IANS
Reader Comments
Interesting how individuals stepped in to buy while institutions and foreigners were selling. That's typical retail investor behaviour—trying to catch the falling knife. Middle East tensions aside, the circuit breaker activating for the 7th time in a year shows this market is extremely volatile. Not a good sign for long-term stability.
The single-stock leveraged ETFs on Samsung and SK hynix seem to be adding fuel to the fire. When markets are already nervous, these products amplify the swings. India should be careful before introducing similar instruments. Also, the won weakening is a double-edged sword—good for exports but bad for imports and inflation.
It's interesting to see SK hynix ADRs trade above offering price in the US while the domestic stock crashes. Shows the disconnect between markets and the short-term profit-taking nature of local investors. The Middle East situation is worrying for oil-importing nations like India and Korea.
Reminds me of what happened to Indian markets during the Russia-Ukraine war. Geopolitical flashpoints create these artificial dips, and if you have cash, it's actually a good buying opportunity. Though I wouldn't recommend trying to time the bottom—better to average in over a few weeks. Samsung at 254,000 won looks tempting after this fall.
The circuit breaker activation being the 7th time this year is alarming. It suggests the market structure itself is unstable. Also, defense stocks falling despite Middle East tensions seems counterintuitive—maybe investors are reassessing what "safe haven" means nowadays. Hanwha dropping 3.2% while oil stocks like SK Innovation
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