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U.S. legislation takes a toll on Korean shares

Dec 22,2017
Korean stocks tumbled to a near three-month low Thursday as the overnight approval of a U.S. tax bill caused foreigners to offload local shares, analysts said. The local currency lost ground against the U.S. dollar.

The benchmark Kospi slid 42.54 points, or 1.72 percent, to 2,429.83. Trading volume was slim at 2.36 million shares worth 4.75 trillion won ($4.39 billion), with losers far outnumbering gainers 627 to 180.

The index hit its lowest point since Sept. 29, when it finished at 2,394.47 points.

“As the U.S. Congress approved the tax bill, global investors are turning their eyes to the world’s largest economy,” said analyst Seo Sang-young from Kiwoom Securities. “The latest news that the Chinese government will put more focus on high-quality economic growth dampened investor sentiment.”

A slight downturn in the fourth-quarter operating profit outlook of Kospi-listed firms also weighed on the market, he said.

Foreigners dumped a net 326.6 billion won worth of Korean shares, while institutions snapped up 304.4 billion won worth of stock more than they sold.

Most shares ended sluggish across the board, led by losses from tech, chemical and tourism businesses.

Market bellwether Samsung Electronics tumbled 3.42 percent to 2,457,000 won, and SK Hynix, a leading chipmaker, plunged 3.87 percent to 77,000 won.

Three local brokerage firms forecasted Samsung Electronics would post a lower-than-expected operating profit for the fourth quarter this year, weighing down investor sentiment for the tech giant.

Chemical firms went south as industry leader LG Chem slumped 1.76 percent to 391,000 won, and Kumho Petro Chemical fell 2.51 percent to 97,200 won.

Korean Air lost 2.95 percent to 32,850 won and Asiana Airlines retreated 3.77 percent to 4,465 won, while Hana Tour Service slid 4.59 percent to 97,800 won.

The secondary Kosdaq market closed at 740.32, down 14.95 points or 1.98 percent from the previous trading day. This was the fourth consecutive day the tech-heavy index has been down.

The local currency closed at 1,082.7 won against the U.S. dollar, down 1.8 won from the previous session.

Bond prices, which move inversely to yields, ended lower. The yield on three-year Treasuries added 0.7 basis point to 2.094 percent, and the return on benchmark five-year government bonds rose 1 basis point to 2.308 percent.

BY KIM JEE-HEE, YONHAP [kim.jeehee@joongang.co.kr]