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Seoul stocks sink 1 pct on Mideast tensions

All News 15:57 January 06, 2020

SEOUL, Jan. 6 (Yonhap) -- South Korean stocks plunged by almost 1 percent on Monday amid looming military tensions in the Middle East that are sending global oil prices skyrocketing. The Korean won lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) lost 21.39 points, or 0.98 percent, to close at 2,155.07. Trading volume was moderate at about 587.5 million shares worth some 5.1 trillion won (US$4.35 billion), with losers outnumbering winners 783 to 101.

Global stock prices began to decline late last week when U.S. President Donald Trump said Qassem Soleimani, the head of Iran's elite Quds Force, was killed in a U.S. drone strike in Baghdad, prompting fresh tensions in one of the world's largest crude-producing regions.

The price of WTI crude jumped 3.1 percent to $63.10 per barrel on Friday, with that of Brent crude also surging 3.6 percent.

The WTI crude futures and Brent futures again spiked 1.98 percent and 3.55 percent, respectively, as of 3:30 p.m. Monday (Seoul time).

Baek Young-chan, an analyst at KB Securities, noted global oil prices may continue to fluctuate for some time, with Iran vowing to take retaliatory measures that the U.S. says may be answered by additional strikes.

Iran's retaliatory measures may include the destruction of crude production bases in the Middle East and the blockade of the Strait of Hormuz, according to the analyst.

"If Iran attacks crude oil facilities, global oil prices are bound to increase over the short term. As the Strait of Hormuz accounts for around 15 percent of global crude oil transportation, global oil prices could spike more than 10 percent if Iran blocks the strait," Baek said.

Iran upped the ante on the day, saying it was abandoning the remaining limits of its 2015 nuclear deal that may signal the resumption of its nuclear weapons development.

The analyst, however, insisted the fresh conflict is unlikely to lead to a full-fledged war.

"A full-fledged war could have a negative impact on Trump ... An all-out war must be a difficult option to choose for Iran as well," he said.

Still, a rise in global oil prices may further undermine South Korea's export slump, with petroleum and petrochemical products accounting for nearly 20 percent of its overall outbound shipments.

The country's exports have dipped for 13 consecutive months since December 2018.

Top chemicals firm LG Chem tumbled 1.29 percent to 307,000 won, with leading refiner SK Innovation shedding 1 percent to 148,000 won.

Most large caps also ended up in negative terrain.

Market kingpin Samsung Electronics remained flat at 55,500 won, but No. 2 chipmaker SK hynix slipped 0.21 percent to 94,300 won, with top pharmaceutical company Celltrion plunging 2.54 percent to 173,000 won.

Individuals scooped up a net 236 billion won, but institutions offloaded a net 320 billion won. Foreigners purchased a net 99 billion won, becoming net buyers for a second consecutive session.

The local currency closed at 1,172.10 won to the dollar, down 5.0 won from the previous session's close.


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