SEOUL - South Korean stocks tumbled to their lowest point in over seven months on Friday, shedding more than 1.5 percent amid investor concerns about the U.S. Federal Reserve's potential further tightening of monetary policy. Meanwhile, the local currency appreciated against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped 40.8 points, closing at 2,375. This is the lowest level since March 14, when the index finished at 2,348.97. Trading volume was subdued, with 507.2 million shares traded worth 8.8 trillion won (approximately US$6.5 billion). Decliners outnumbered gainers 757 to 135.
Federal Reserve Chairman Jerome Powell, in a speech given at a discussion session in New York on Thursday (U.S. time), stated that inflation remains "too high," hinting at the possibility of another interest rate hike. "Powell's statement and an increase in longer-term bond yields have negatively impacted investor sentiment," said Lee Kyung-min, an analyst at Daishin Securities.
Tech and battery shares spearheaded the decline in Seoul. Top-cap Samsung Electronics dropped 1.01 percent to 68,800 won, while home appliance maker LG Electronics fell 0.75 percent to 105,400 won. Battery shares were also down, with LG Energy Solution and POSCO Future M declining 3.54 percent and 5.66 percent to close at 436,500 won and 300,000 won, respectively.
Game developers NCSOFT and Netmarble saw drops of 3.59 percent and 2.98 percent, closing at 228,500 won and 37,500 won, respectively. In the aviation sector, Korean Air Lines and Asian Airlines fell 1.43 percent and 2.63 percent to 19,350 won and 9,640 won. This comes ahead of a crucial board meeting to discuss the sale of Asian Airlines' cargo division as part of a takeover deal between the two companies.
Celltrion, a leading pharmaceutical firm, retreated 0.07 percent to 142,200 won after announcing a general shareholders meeting scheduled for next week to decide on a planned merger with its sales affiliate, Celltrion Healthcare.
The local currency closed at 1,352.4 won against the U.S. dollar, up 5 won from the previous session. Bond prices rose, causing yields to fall; the yield on three-year Treasurys fell by 3.7 basis points to 4.033 percent, and the return on five-year government bonds dropped 3.1 points to 4.183 percent.