South Korean shares slump

Seoul, Sep 21 (IANS) South Korean shares slumped on Monday on uncertainties about the timing of interest rate hike in the US after the US Federal Reserve kept its policy rate unchanged last week.

The benchmark Korea Composite Stock Price Index (KOSPI) declined 31.27 points (1.57 percent) to 1,964.68 at the close, reported Xinhua news agency.

Trading volume stood at 372.13 million shares worth 3.76 trillion won ($3.2 billion).

The Fed refrained from altering the federal funds rate in September, citing global economic slowdown and volatile financial market in the past month.

The rate freeze boosted worries about the global economy and uncertainties over when the Fed will hike rates for the first time in about nine years.

Concerns emerged about South Korea’s economic slowdown after the US rate hike, propping up expectations for another rate cut by the Bank of Korea (BOK), which already lowered its policy rate by one percentage point over a year to an all-time low of 1.5 percent in June.

Some South Korean economists recommended the devaluation of the South Korean currency to the dollar rather than further rate cuts in response to the expected rate hike within this year.

As part of efforts to cool down excessive expectations for further rate cuts, BOK Governor Lee Ju-yeol said the Fed rate hike would come as late as December this year.

Foreign investors turned into net sellers in four sessions by reducing their holdings of local stocks by 198 billion won. Retail investors purchased a net 255 billion won worth of stocks, but local financial institutions sold shares worth 105 billion won.

Most large-cap shares lost ground. Market bellwether Samsung Electronics shrank 3.1 percent, and top carmaker Hyundai Motor slumped 3.9 percent.

The state-run power supplier Korea Electric Power Corp. slipped 0.4 percent, and memory chip giant SK Hynix lost 2.5 percent.

Leading cosmetics maker Amore Pacific declined 2.1 percent, but top mobile operator SK Telecom added 0.4 percent.

Related Posts

Leave a Reply