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(LEAD) S. Korean shares down for 4th day on U.S. rate woes

All Headlines 16:00 August 29, 2016

(ATTN: ADDS bond yields at bottom)

SEOUL, Aug. 29 (Yonhap) -- South Korean stocks closed lower on Monday, extending their losing streak to a fourth day as the market remained under pressure from indications that the U.S. may soon raise its key interest rate. The local currency sharply lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) dropped 5.15 points, or 0.25 percent, to 2,032.35. Trade volume came to 314.35 million shares worth 3.80 trillion won (US$3.3 billion), with losers outnumbering gainers 668 to 157.

Foreigners net-purchased 83.4 billion won worth of stocks, while institutional investors and individuals sold a net 42.3 billion won and 39.4 billion won worth of stocks, respectively,

Investor sentiment was apparently hurt by comments by U.S. monetary policymakers.

U.S. Federal Reserve Chair Janet Yellen openly said last week that "The case for an increase in the federal funds rate has strengthened in recent months."

Analysts here do not rule out the possibility that the rate will be raised in September.

"The chances of a U.S. rate hike has grown. But its impact on South Korea's stock market will be limited," said Han Dae-hoon, an analyst at SK Securities Co. Usually, the KOSPI has recorded a 2-3 percent drop, affected by such a U.S. rate issue, he pointed out.

South Korea has $371.4 billion in foreign exchange reserve and it has also agreed to resume a currency swap deal with Japan, he noted.

"It represents the government's swift measure against the growing possibility of a U.S. rate hike," he said.

Market watchers will closely monitor U.S. job data to be released on Thursday and the results of the G20 Leaders' Summit scheduled to open in the eastern Chinese city of Hangzhou on the weekend.

Large caps closed mixed, meanwhile, with market bellwether Samsung Electronics adding 1.74 percent to 1,640,000 won.

Leading automaker Hyundai Motor slipped 1.11 percent to 134,000 won and its smaller affiliate Kia Motors also lost 1.53 percent to 41,700 won.

Naver, the dominant Internet portal here, advanced 0.62 percent to 810,000.

The local currency closed at 1,124.95 won against the U.S. dollar, down 11.25 won from the previous session.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys gained 3.1 basis points to 1.272 percent and the return on the benchmark five-year government bond added 3.1 basis points to 1.301 percent.


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