Seoul: Seoul stocks fell over 4 percent Tuesday, weighed by heavy foreign selling, as U.S. President Donald Trump renewed threats against Iran, with no end in sight to the monthlong Middle East war. The Korean won weakened sharply against the U.S. dollar to a 17-year low.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) fell 224.84 points, or 4.26 percent, to 5,052.46, extending the losing streak to a fourth session. Trade volume was a bit heavy at 1.15 billion shares worth 28.23 trillion won (US$13.64 billion), with losers outnumbering winners 789 to 117. Foreigners sold a net 3.84 trillion won worth of shares, while institutional and retail investors purchased a net 1.03 trillion won and 2.43 trillion won worth of shares, respectively.
Risk-off sentiment intensified as the conflict, which began in late February following U.S.-Israeli strikes on Iran, showed signs of further escalation. On Monday (U.S. time), Trump threatened to "completely obliterate" Iran's Kharg Island, a key oil hub, as well as its power plants and oil wells, if a peace deal with the United States is not reached "shortly." Tehran, however, dismissed the peace proposals as "unrealistic, illogical and excessive," while a parliamentary security committee approved a draft bill to introduce a toll system for the Strait of Hormuz, according to foreign media reports.
Israeli Prime Minister Benjamin Netanyahu said the war had achieved more than half its aims, though he did not put a timeline on when it would end. Iran-backed Houthi militants in Yemen joined the war over the weekend, stoking fears of further disruptions to global oil supplies. "The Iran crisis, coupled with rising oil prices, is pushing up the equity risk premium," Lee Jung-bin, an analyst at Shinhan Securities, said. "A cautious approach to the market seems to be needed, given the possibility of downward revisions to earnings forecasts amid geopolitical risks." Losses were broad-based and deep.
Market bellwether Samsung Electronics retreated 5.16 percent to 167,200 won, while its chipmaking rival SK hynix dipped 7.56 percent to 807,000 won. Top automaker Hyundai Motor dropped 5.11 percent to 445,500 won, while its sister affiliate Kia tumbled 4.16 percent to 145,200 won. Leading battery maker LG Energy Solution shed 3.78 percent to 394,500 won, and major steelmaker POSCO lost 3.06 percent to 332,500 won.
Bio giant Samsung Biologics decreased 1.7 percent to 1,504,000 won, and Celltrion went down 2.13 percent to 197,200 won. Defense giant Hanwha Aerospace fell 4.51 percent to 1,249,000 won, and nuclear power plant builder Doosan Enerbility slid 2.55 percent to 91,800 won. Major financial group KB Financial fell 2.74 percent to 141,900 won.
Shipbuilders finished mixed. Leading shipbuilder HD Hyundai Heavy lost 3.12 percent to 465,000 won, while its rival Hanwha Ocean rose 1.69 percent to 120,200 won. The local currency was quoted at 1,530.1 won against the U.S. dollar as of 3:30 p.m., down 14.4 won from the previous session to the weakest level since March 2009. Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasurys added 1 basis point to 3.552 percent, while the return on the benchmark five-year government bonds shed 1.9 basis points to 3.777 percent.