Seoul: South Korean stocks experienced a sharp decline of 4 percent on Wednesday, attributed to escalating tensions between the United States and Iran that have led to a rise in crude oil prices and increased inflation concerns. In contrast, the Korean won gained strength against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) ended the day at 6,562.72, marking a decrease of 273.08 points or 3.99 percent, thereby halting a two-session winning streak. The downturn was influenced by a new series of U.S. airstrikes targeting Iranian positions around the Strait of Hormuz, which in turn drove up oil prices and reignited fears over inflation.
The possibility of an interest rate hike at the upcoming Federal Reserve meeting further compounded investor concerns. As a result, all major U.S. stock indexes saw declines, and the benchmark 10-year U.S. Treasury yield reached its highest level since January of the previous year. Trading activity was subdued, with a volume of 321.2 million shares valued at 18.6 trillion won (approximately US$13.6 billion). The market saw 734 stocks declining in value compared to 137 that rose.
Foreign and institutional investors offloaded shares worth a net 1.9 trillion won and 2 trillion won, respectively, while individual investors made net purchases amounting to 2.3 trillion won. Lee Kyung-min, an analyst from Daishin Securities, commented, "The KOSPI went bearish as investor sentiment was dragged down by rising oil prices and sovereign debt yields in major economies."
Among major companies, Samsung Electronics saw its shares decline by 4.02 percent to 250,500 won, and SK hynix fell by 4.73 percent to 1.61 million won. In the automotive sector, Hyundai Motor's stock decreased by 5.62 percent to 378,000 won, with Kia following suit, dropping 5.18 percent to 124,400 won.
The battery manufacturing sector also faced challenges, as LG Energy Solution's stock fell by 5.31 percent to 347,500 won, while POSCO Future M experienced an 8 percent decline to 176,000 won. In the tech industry, Naver's shares decreased by 2.79 percent to 209,000 won, and Kakao's stock dipped by 3.84 percent to 35,100 won.
The Korean won appreciated slightly, closing at 1,368.7 won per U.S. dollar, an increase of 1.7 won from the previous session. Meanwhile, bond prices fell, leading to higher yields. The yield on three-year Treasurys increased by 5.2 basis points to 3.930 percent, while the yield on five-year government bonds rose by 6.1 basis points to 4.167 percent.