Market awaits Fed decision on interest rates

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Market awaits Fed decision on interest rates

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Seoul’s main index tumbled slightly on Wednesday, pulled down by foreign selling of big-ticket stocks and signs of an interest rate hike by the U.S. Federal Reserve.

The benchmark Kopsi closed at 2,512.90, down 1.29 points from the previous session. Foreign investors net sold 160.2 billion won ($148.8 million) in local shares, while retail investors offloaded 75.2 billion won. Institutional investors, on the other hand, bought 197.1 billion won in shares.

Kim Ye-eun, an analyst at IBK Securities, attributed the Kospi’s decline to investors offloading their shares of Samsung Electronics and other big companies.

Most analysts said North Korea’s launch of a ballistic missile earlier in the day had little effect on the market, with most investors’ eyes set on the Federal Reserve. Jerome Powell, President Trump’s nominee for Fed chairman, hinted at the possibility of an interest rate hike on Tuesday.

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Movement of large-cap shares was mixed across the board. Samsung Electronics, the largest company on the Kospi by market capitalization, fell 1.28 percent to 2,630,000 won. SK Hynix, the second-largest chipmaker in the country after Samsung, inched down 0.24 percent to 82,400 won.

The Korea Electric Power Corporation, the state-run utilities provider, retreated 1.04 percent to 37,900 won. SK Telecom, Korea’s largest mobile carrier, slipped 1.16 percent to 256,000 won, and home appliances maker LG Electronics edged down 0.44 percent to 91,400 won.

Auto shares were in positive terrain. Hyundai Motor, Korea’s largest carmaker, jumped 2.23 percent to 160,500 won on the back of news that the company restarted production of its new crossover, the Kona, after the labor union ended its partial strike at the company’s production facility in Ulsan.

Hyundai’s affiliate, Kia Motors, rose 1.21 percent to 33,350 won, and parts supplier Hyundai Mobis pushed up 1.35 percent to 263,500 won.

LG Chem, Korea’s top battery producer, inched up 0.48 percent to 422,500 won. Steelmaker Posco closed at 329,000 won, up 2.17 percent from the previous session.

The tech and pharmaceutical-heavy Kosdaq index rose 8.60 points on Wednesday to close at 781.72, recovering from an over 2 percent fall during the previous session.

The local currency closed at 1,076.80 won against the U.S. dollar, up 7.60 won from Tuesday.

Returns on three-year government bonds closed at 2.11 percent, down one basis point from Tuesday. Yields on 10-year bonds remained fixed at 2.48 percent.


BY CHOI HYUNG-JO, YONHAP [choi.hyungjo@joongang.co.kr]
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