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Seoul shares sink 1.38% on possible rate hike in U.S.

Aug. 21, 2014 - 20:31 By Korea Herald
South Korean stocks sank 1.38 percent Thursday as investor sentiment was shaken by the possibility of an early rate hike in the United States, analysts said Thursday. The local currency fell against the U.S. greenback.

The benchmark Korea Composite Stock Price Index lost 28.57 points to close at 2,044.21, dipping below the 2,050 level for the first time in 10 days. Trading volume was slim at 299.8 million shares worth 4.47 trillion won ($4.38 billion), with decliners far outpacing gainers 504 to 318.

The Federal Reserve released minutes of its July meeting that showed there was discussion on the timing of a rate hike among board members.

“Investors have thought that the Fed would increase the rate sometime this year. But according to the Fed’s July minutes, the hawkish voices to raise the rate sooner than anticipated have become stronger,” said Lim Dong-rak, a researcher at Hanyang Securities Co.

“A higher interest rate in the U.S. would attract money from around the world. Emerging countries are very susceptible to a U.S. rate hike.”

Institutional investors dumped a net 369.6 billion won worth of local shares. Foreign investors extended their buying spree to seven sessions but at a reduced volume of net 1.3 billion won.

Most shares ended in negative territory, led by losses in tech, auto and bank shares.

Samsung Electronics, the world’s biggest handset maker, tumbled 2.06 percent to 1,235,000 won, the lowest in nearly two years.

No. 1 Internet portal Naver fell 3.8 percent to 759,000 won and runner-up Daum dipped 3.54 percent to 169,000 won.

Top carmaker Hyundai Motor slid 0.88 percent to 224,000 won and its auto parts unit Hyundai Mobis dropped 2.07 percent to 284,000 won. (Yonhap)