Seoul Equities Drop More Than 1% Due to Concerns about Rate Hikes, Korean Currency Keeps Falling

Seoul Equities

Tuesday saw a more than 1% decline in South Korean equities as investors stayed away from riskier investments due to worries about the US Federal Reserve’s upcoming aggressive rate rises. Following a significant decline in the previous session, the Korean won has been losing ground versus the US dollar.

The sixth session of losses for the Korea Composite Stock Price Index (KOSPI) saw a loss of 27.16 points, or 1.10 percent, to close at 2,435.34.

460.02 million shares were traded for a modest total value of 7.34 trillion won ($5.49 billion), with decliners outnumbering gainers 686 to 206.

Institutions sold 132.03 billion won’s worth of shares, while retail and overseas investors bought 139.04 billion and 969 million won’s respectively.

According to Kiwoom Securities analyst Han Ji-young, “the sluggish market momentum throughout the world is mostly due to uncertainties over the speed of US interest rate rises and related macroeconomic circumstances.”

Investors will be listening closely to what Federal Reserve Chair Jerome Powell has to say on the direction of monetary policy and the economy on Friday (US time) at the annual Jackson Hole symposium.

For the second consecutive month, the Fed increased its benchmark interest rate by 75 basis points last month. In order to control inflation, it would pursue vigorous monetary tightening, according to the minutes of its July meeting.

According to economists, rate increases in the US and the resulting strong currency may lead investors to quit the South Korean market in search of better returns.

Tuesday saw a general decline in big-cap equities, with tech and bio sectors particularly hard hit.

market indicator In response to reports that semiconductor shipments decreased year over year this month, Samsung Electronics dropped 1.5 percent to 59,100 won and SK Hynix, the No. 2 chipmaker, dropped 1.68 percent to 93,600 won.

Samsung SDI down 2.17 percent to 587,000 won, while major chemical company LG Chem fell 2.97 percent to 620,000 won.

Among significant IT companies, LG Energy Solution, a prominent battery manufacturer, was the sole gainer, rising 0.56 percent to 445,000 won.

Pharmaceutical behemoth Celltrion fell 3.0 percent to 194,000 won, while Samsung Biologics, the biotech division of South Korea’s Samsung Group, down 2.59 percent to 829,000 won.

The world’s largest internet portal Naver had a 1.83 percent decline to 241,000 won, and platform operator Kakao saw a 0.27 percent decline to 74,800 won.

Major auto manufacturers did not change. Both Hyundai Motor and its smaller subsidiary Kia finished level at 189,000 won.

The local currency lost 5.7 won from the conclusion of the previous session to conclude at 1,345.5 won to the US dollar. It was the lowest amount since 1,356.80 earned on April 28, 2009, when it came to an end.

The loss occurred the day after the won fell to the level of 1,330 versus the US dollar for the first time in more than 13 years.

President Yoon Suk-yeol earlier on Tuesday stated that the government will be well-prepared for any negative effects on the markets from the falling exchange rate. In a verbal intervention to stop the further depreciation of the won, the foreign exchange regulators also pledged to increase market monitoring against any speculative bets.

Source: Korea Herald

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