South Korean stocks plunged 2.24 percent on Thursday as investors were not cheered by the central bank’s rate cut and foreigners dumped local stocks upon a futures and option expiry, analysts said. The local currency tumbled against the U.S. dollar.
After starting 0.08 percent higher, the Korea Composite Stock Price Index dived 41 points to finish at 1,785.39, falling below the 1,800 level for the first time in more than a month.
Trading volume was light at 314.5 million shares worth 4.24 trillion won ($3.69 billion), with losers far outnumbering gainers 614 to 203.
The Bank of Korea unexpectedly cut its key policy rate for the first time in more than three years in an effort to buffer the impact of the deepening eurozone debt crisis.
“In the morning, the market took a wait-and-see stance before the central bank’s key rate announcement,” said analyst Kwak Jung-bo from Samsung Securities Co.
“It was such a surprise move, but many expected the BOK to lower the key rate in August to boost the slowing economy,” said Kwak. “Nevertheless, investors believe that a rate cut is not enough to stimulate the market, as it isn’t in Europe.”
He also said that option and futures expirations contributed to the market volatility, prompting offshore investors to sell a net 282 billion won worth of South Korean stocks.
Most shares finished in negative territory, led by large-cap shares such as techs, steelmakers and autos.
World’s biggest memory chip maker Samsung Electronics fell 2.42 percent to 1,091,000 won, and its smaller rival SK Hynix tumbled 3.05 percent to close at 22,250 won.
Steelmakers and shipbuilders were also bearish, with market leaders POSCO declining 2.99 percent to 357,500 won and Hyundai Heavy Industries retreating 1.77 percent to 250,000 won.
Top automaker Hyundai Motor lost 3.1 percent to finish at 218,500 won mainly due to its labor union’s strike set to take place on Friday for the first time in three years.
The local currency closed at 1,151.5 won against the greenback, down 10.6 won from Wednesday’s close, as the BOK’s rate cut triggered sell-offs of South Korean currency, dealers said.
