+ A

Kospi takes 1.25% hit on U.S.-China tensions

May 30,2019
Local stocks fell sharply Wednesday due to the escalating trade dispute between the United States and China. The won plunged against the dollar.

The benchmark Kospi plunged 25.51 points, or 1.25 percent, to close at 2,023.32. Trading volume was moderate at 368 million shares worth 4.56 trillion won ($3.7 billion), with losers outnumbering gainers 689 to 168.

Taking a cue from overnight losses on Wall Street, the index opened lower and extended its losses in the afternoon session. U.S. stocks plunged on Tuesday over reports that Beijing is considering a ban on exports of rare earth minerals to the United States in the latest development in the trade tussle.

“[U.S. President] Donald Trump recently said that the United States is not ready to make a deal with China, which indicates that this trade war could extend,” said Seo Sang-young, an analyst at Kiwoom Securities.

“Chinese tech firm Huawei considering a lawsuit against the U.S. government also had a negative impact,” he continued.

Foreigners have been on a selling spree for four straight days, offloading 361 billion won worth of stocks, while institutions bought a net 171 billion won. Retail investors scooped up a net of 193 billion won.

Most shares ended in negative terrain across the board.

Market kingpin Samsung Electronics dipped 1.76 percent to 41,800 won, while its smaller rival LG Electronics moved down 0.92 percent to 323,000 won. No. 2 chipmaker SK Hynix, however, gained 0.30 percent to 66,100 won.

Pharmaceutical companies also lost ground, with Celltrion losing 0.27 percent to 185,500 won and Samsung BioLogics sliding 1.53 percent to 289,500 won.

Auto shares were mixed. Korea’s top automaker Hyundai Motor lost 1.83 percent, but its sister company Kia Motors remained unchanged at 40,900 won.

The secondary Kosdaq fell 11.29 points, or 1.61 percent, to close at 691.47.

The local currency closed at 1,193.90 won against the dollar, up 8.10 won from the previous session, as demand for the dollar rose in line with foreign sell-offs of local stocks and a weak Chinese yuan.

“The yuan’s weakness, coupled with foreigners’ selling binge, are working to help the local currency decline,” said Min Kyong-won, an analyst at Woori Bank.

Bond prices ended higher. The yield on three-year bonds lost 3.5 basis points to 1.619 percent, and the return on 10-year bonds fell 5.2 basis points to 1.741 percent.

BY KO JUN-TAE, YONHAP [ko.juntae@joongang.co.kr]