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Kospi ends lower as investors look for profits

May 04,2018
Korean stocks ended lower Thursday as foreign and institutional investors offloaded construction stocks to engage in profit-taking. The won depreciated against the U.S. dollar.

The benchmark Kospi fell 18.36 points, or 0.73 percent, to 2,487.25. Trade volume was moderate at 7.4 trillion won ($6.9 billion).

Foreign investors sold a net 323.3 billion won worth of stocks, dragging down the main index, while institutions bought a net 18.8 billion won. Individuals were net buyers, purchasing a net 259.1 billion won.

Increased uncertainty over U.S. monetary policy weighed on Wall Street, which in turn had a negative impact on Korea’s main index. The Dow Jones industrial average lost 0.72 percent, with the tech-heavy Nasdaq composite index declining 0.42 percent.

On Wednesday, the U.S. Federal Reserve announced that the Federal Open Market Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.

Profit-taking also weighed on the Kospi’s decline.

“Foreigners dumped construction stocks and other shares that are related to inter-Korean economic cooperation to lock in past gains, [which affected the main index],” said Park Chun-young, an analyst at Daishin Securities.

Construction and other cross-border related stocks rose sharply in recent days following last week’s inter-Korean summit in which the leaders of South and North Korea agreed to take steps to connect and modernize inter-Korean railways and roads as part of broader reconciliation and cooperation.

Large-cap stocks saw mixed trade.

Among decliners, No. 2 chipmaker SK Hynix fell 0.24 percent to 82,900 won, while leading steelmaker Posco lost 3.22 percent to 360,500 won.

The secondary Kosdaq declined 4.96 points, or 0.57 percent, to 866.07. The tech-heavy index also ended in negative terrain with lower IT and pharmaceutical shares.

Institutions and foreigners were net sellers, each offloading 41.8 billion won and 42.2 billion won. Individuals bought a net 87.1 billion won.

By sector, pharmaceutical shares fell 0.8 percent and IT parts dropped 0.6 percent.

The local currency closed at 1,076.30 won against the U.S. dollar, up 0.20 won from the previous session’s close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year bonds gained 0.9 basis points to 2.25 percent, and the return on 10-year government bonds was unchanged at 2.75 percent.

BY KIM EUN-JIN, YONHAP [kim.eunjin1@joongang.co.kr]