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Global trade fiction with U.S. spooks investors

July 03,2018
Korean stocks ended lower Monday on institutional selling as heightened trade friction between the United States, China and the EU has spooked investors. The won depreciated against the dollar.

The benchmark Kospi lost 54.59 points, or 2.35 percent, to 2,271.54. Trade volume was moderate at 5.89 trillion won ($5.26 billion).

On Sunday, U.S. President Donald Trump said the European Union was “as bad as China” when it came to trade during a TV interview. Tariff fears against Europe and reports of sluggish exports in Asia dragged the main index down.

Institutions dumped a net 400 billion won worth of shares. Foreigners purchased a net 115 billion won and individuals bought 242 billion won in stocks, keeping the index from falling further.

“Investors also sold off stocks related to inter-Korean economic cooperation to lock in recent profits,” said Han Ji-young, an analyst at Cape Investment & Securities.

Some stocks related to inter-Korean economic cooperation had risen after the two Koreas agreed last week to conduct a joint study on modernizing and connecting cross-border roads as part of efforts to carry out agreements reached at a summit in April.

Builders and steelmakers were losers.

Leading steelmaker Posco shed 4.26 percent to 315,000 won. Hyundai Steel dropped 4.18 percent to 50,400 won and Hyundai Engineering & Construction plunged 6.09 percent to 54,000 won.

Large-cap stocks fell across the board.

Market bellwether Samsung Electronics shed 2.36 percent to 45,550 won, and No. 2 chipmaker SK Hynix declined 2.33 percent to 83,700 won.

Securities shares fell. Mirae Asset Daewoo dropped 4.69 percent to 8,120 won while NH Investment & Securities shed 5.69 percent to 14,100 won.

Among gainers, state-run utility firm Korea Electric Power Corporation rose 1.41 percent to 32,450 won.

The secondary Kosdaq fell 28.40 points, or 3.47 percent, to 789.82, also dragged down by weakened investor confidence amid global trade woes.

Institutions sold a net 63.5 billion won while foreigners offloaded a net 39.2 billion won worth of shares. Individuals bought a net 89.6 billion won.

The local currency closed at 1,120.00 won against the U.S. dollar, up 5.50 won from the previous session’s close.

Bond prices ended mixed. The yield on three-year bonds rose 0.1 basis points to 2.12 percent, and the return on 10-year bonds fell 2.6 basis points to 2.53 percent.

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