Kospi closes lower after interest rate hike
Korean stocks finished lower yesterday as the central bank raised its key interest rate to rein in spiraling inflation, analysts said. The local currency fell against the U.S. dollar.The benchmark Korea Composite Stock Price Index lost 14.71 points, or 0.9 percent, to 1,564. Volume was thin at 215.1 million shares worth 3.9 trillion won ($3.2 billion) with losers outpacing gainers 516 to 296.
“The rate hike apparently spooked investors, though the outlook for monetary policy was mixed largely due to a recent decline in oil prices,” said Sohn Kyung-geun, an analyst at Dongbu Securities.
Earlier in the day, the Bank of Korea jacked up the seven-day repo rate for August by 0.25 percentage point to 5.25 percent, the first increase in a year and the highest level since February 2001. Korea’s consumer prices jumped 5.9 percent on-year in July, the fastest increase in almost 10 years, breaching the BOK’s target range of 2.5-3.5 percent for the eighth straight month. The central bank expects inflation to spike 5.2 percent in the second half on oil costs and a weaker won.
“The Kospi’s gains will likely be limited for the time being due to the rate hike,” Sohn noted.
Finance stocks were battered following the central bank’s announcement. Top lender Kookmin Bank slumped 2.0 percent to 59,200 won and Korea Investment Holdings fell 2.7 percent to 40,850 won. Brokerages were also dented with Hyundai Securities sliding 1.6 percent to 12,150 won.
Tech exporters and construction also finished in negative territory. Market heavyweight Samsung Electronics shed 1.5 percent to 578,000 won and flat panel giant LG Display tumbled 1.7 percent to 28,700 won.
Daewoo Shipbuilding and Marine Engineering Co. the world’s third-largest maker of ships, gained 850 won, or 2.4 percent, to 36,000, the most since July 24. The company said it won $1.46 billion of offshore contracts from two U.S. buyers.
Top domestic builder Daewoo Engineering and Construction plummeted 3.9 percent to 12,400 won.
The local currency closed at 1,016.5 won against the dollar, down 0.6 won from Wednesday’s close, as offshore investors scooped up the greenback, dealers said.
Yonhap, Bloomberg
with the Korea JoongAng Daily
To write comments, please log in to one of the accounts.
Standards Board Policy (0/250자)