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Seoul stocks drop as investors remain cautious

Aug 27,2019
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Korean shares sank Monday as investors remained wary over an escalating trade war between Washington and Beijing that darkens global growth outlook. The won depreciated against the dollar.

The benchmark Kospi shed 31.99 points, or 1.64 percent, to close at 1,916.31. Trade volume was moderate at 317 million shares worth 3.64 trillion won ($2.98 billion).

U.S. President Donald Trump said Washington would increase tariffs on $250 billion of Chinese goods to 30 percent from 25 percent, responding to China’s announcement of new tariffs on $75 billion worth of U.S. goods.

“Given the tough stances of the U.S. and China, a possibility increases that there will be ‘no deal’ in their trade talks until the U.S. presidential election next year,” said Park Sang-hyun, an analyst at HI Investment & Securities.

Investors were also disappointed with the U.S. Federal Reserve chief’s vague stance about future rate policy.

Fed Chairman Jerome Powell told an annual symposium in Jackson Hole last week that the U.S. economy is in a “favorable place” but gave few clues whether the Fed will cut interest rates at its next meeting.

Individuals bought a net 53.9 billion won worth of shares, and foreign investors sold a net 142.3 billion won worth. Institutions bought a net 71.9 billion won of stocks.

Most large caps traded in negative territory, with Samsung Electronics falling 0.8 percent to 43,600 won and global chipmaker SK Hynix down 3.49 percent to 71,800 won.

Top automaker Hyundai Motor declined 1.19 percent to 124,500 won, and its smaller affiliate Kia Motors dipped 0.59 percent to 42,100 won.

Posco slipped 1.93 percent to 203,500 won, and Naver shed 3.37 percent to 143,500 won.

In biopharmaceuticals, Celltrion plummeted 6.6 percent to 141,500 won and Samsung BioLogics fell 4.23 percent to 271,500 won.

The Kosdaq fell 26.07 points, or 4.28 percent, to end the session at 582.91. The tech-heavy index was dragged down by foreign and institutional selling of shares and a 3.0 percent fall in Nasdaq Index in the weekend.

The won closed at 1,217.80 won against the dollar, up 7.2 won from the previous session’s close on increased appetite for safer assets.

Amid a sharp drop in stock prices and increased risk-off sentiment, bond prices, which move inversely to yields, closed sharply higher. The yield on three-year bonds fell 4.8 basis points to 1.12 percent. The yield on 10-year bonds fell 7.0 basis points to 1.19 percent.

BY KIM HE-YU, YONHAP [kim.heyu@joongang.co.kr]