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Seoul stocks dive to fresh 19-month low amid woes over Fed's rate decision

June 15, 2022 - 16:08 By Yonhap
An electronic board showing the Korea Composite Stock Price Index (Kospi) at a dealing room of the Hana Bank headquarters in Seoul on Wednesday. (Yonhap)

South Korean stocks sank to a fresh 19-month low Wednesday to extend their losing streak to a seventh day ahead of the US Federal Reserve's interest rate decision amid high inflation and concerns over a global recession. The local currency also fell against the US dollar.

The Korea Composite Stock Price Index (KOSPI) lost 45.59 points, or 1.83 percent, to close at 2,447.38. It is the lowest figure since Nov. 10, 2020, when the index closed at 2,452.83.

Trading volume was moderate at 700.92 million shares worth 9.80 trillion won ($7.59 billion), with decliners far outpacing gainers 812 to 86.

The market opened a tad lower after Wall Street ended mixed but had extended losses on heavy foreign sell-offs.

Foreign investors sold a net 454.42 billion won worth of shares, while individuals and institutions bought a net 346.28 billion won and 73.6 billion won worth of shares, respectively.

Investors remained wary of the result of the Federal Reserve's two-day interest rate-setting meeting set to end Wednesday (US time) amid the prospect that the US central bank would raise the key rate by 75 basis points to tame the surging inflation.

If the Fed does that, it would be the first time since 1994 that it raised the rate by three-quarters of a percentage point at a time, a move expected to accentuate its concerns over runaway inflation.

"Investors want to check what path the Fed will take on monetary policy down the road amid deepening concerns over a global economic downturn and if it is willing to take responsibility for high inflation," Lee Woong-chan, an analyst at Hi Investment & Securities, said.

In Seoul, most big-cap shares traded lower, with tech shares leading the fall.

Market bellwether Samsung Electronics fell 1.94 percent to 60,700 won, and No. 2 chipmaker SK hynix lost 1.21 percent to 97,900 won.

Major battery maker LG Energy Solution tumbled 1.52 percent to 420,000 won, and LG Chem went down 0.53 percent to 561,000 won.

Top steelmaker POSCO decreased 0.76 percent to 261,500 won, and Samsung SDI shed 0.56 percent to 528,000 won.

Internet portal giant Naver sank 3.36 percent to 244,500 won, and platform operator Kakao dived 5.09 percent to 72,700 won.

Among decliners, K-pop powerhouse Hybe dived 24.87 percent to 145,000 won, after BTS announced an unexpected decision to suspend group projects.

But carmakers gathered ground, as unionized truckers ended their weeklong strike Tuesday following an agreement with the government upon their continued push for a freight rate system that guarantees basic wages for truck drivers amid surging fuel prices.

Hyundai Motor rose 1.46 percent to 174,000 won, and its smaller affiliate Kia inched up 0.13 percent to 78,100 won.

Banks and insurers also finished higher on envisioned high interest rates.

Internet-only Kakao Bank gained 1.27 percent to 35,800 won, and top life insurer Samsung Life Insurance jumped 2.51 percent to 65,400 won.

The local currency ended at 1,290.5 won against the US dollar, down 4.1 won from the previous session's close. (Yonhap)