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(LEAD) Seoul stocks trim gains on escalating Middle East tensions, Korean won sharply down

All News 16:40 January 03, 2020

(ATTN: ADDS bond yields at bottom; photo)

SEOUL, Jan. 3 (Yonhap) -- South Korean stocks pared earlier gains to close nearly flat Friday as escalating tension in the Middle East spooked investor sentiment. The Korean won sharply fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 1.29 points, or 0.06 percent, to end at 2,176.46. Trade volume was moderate at 622 million shares worth 5.6 trillion won (US$4.8 billion), with losers outnumbering gainers 422 to 391.

Foreigners bought a net 265 billion won worth of local stocks, and individual investors scooped up a net 222 billion won. Institutions sold a net 546 billion won worth of stocks on the Seoul bourse.

This photo shows a trading room at KEB Hana Bank in Seoul on Jan. 3, 2020. (Yonhap)

The index got off to a strong start, tracking strong overnight gains on Wall Street buoyed by the Chinese central bank's move to add more liquidity to stimulate the economy.

However, it surrendered early gains on news that U.S. air strikes ordered by President Donald Trump killed a top Iranian commander, which heightened tensions in the one of the world's largest crude-producing region.

"The market will feel more pressure if geopolitical risks rise amid the global economy slowdown," said Seo Sang-young, an analyst at Kiwoom Securities. "If international oil prices surge, it will increase costs and subsequently weigh down companies' earnings."

Crude oil prices skyrocketed as high as 4 percent on the market following the news on U.S. air strikes in Baghdad.

Big-name shares in Seoul closed mixed.

Top market cap Samsung Electronics inched up 0.54 percent to 55,500 won, but No. 2 memory chip maker SK hynix fell 0.21 percent to 94,500 won after touching a new yearly high.

No. 1 automaker Hyundai Motor dropped 1.69 percent to 116,000 won, while its sister company Kia Motors lost 1.18 percent to 42,000 won. However, auto parts maker Hyundai Mobis rose 1.01 percent to 250,000 won.

Major oil stocks were bullish, with the country's top refiner SK Innovation adding 2.05 percent to 149,500 won, while No. 3 S-Oil advanced 1.74 percent to 93,500 won.

The South Korean won closed at 1,167.10 won against the U.S. dollar, sharply down 9 won from the previous session's close, due to risk-off sentiment.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys sharply fell 5.7 basis points to 1.270 percent, and the return on the benchmark five-year government bond plunged 8.0 basis points to 1.361 percent.

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