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Blue chips suffer after U.S. raises interest rate

June 15,2018
Korean shares dropped Thursday as worries over possible fallout from the U.S. interest rate hike and its future belt-tightening outlooks caused a selling spree by foreign investors. The Korean won depreciated against the U.S. dollar.

The benchmark Kospi shed 45.35 points, or 1.84 percent, to finish at 2,423.48. Trade volume was heavy at 9.62 trillion won ($8.89 billion).

The market opened lower on news that the Federal Reserve on Wednesday raised the benchmark rate by 0.25 percent to the range of 1.75 percent to 2 percent, while signaling two more rate hikes in 2018 rather than one.

Though the Seoul government tried to alleviate investors by saying the decision would have a limited impact on Korea, the index lost ground.

“The Fed’s move to increase the key rates faster than previously expected sparked worries among investors over capital outflows from emerging economies,” said Lee Kyung-min, an analyst at Daishin Securities.

Offshore investors dumped a net 470.3 billion won worth of local shares while institutions sold a net 53.7 billion won. Retailers picked up a net 501.3 billion won.

Most blue chips ended lower.

Market bellwether Samsung Electronics lost 2.43 percent to 48,200 won, and chip giant SK Hynix retreated 2.38 percent to 86,300 won.

Top automaker Hyundai Motor gave up 3.91 percent to 135,000 won, and LG Chem decreased 2.76 percent to 370,000 won.

Construction and materials companies also tumbled on weakened momentum for potential inter-Korean development projects.

“It will take time before North Korea takes concrete steps for denuclearization, only after which the United States and the international community will lift sanctions,” Lee added.

Major bio shares had mixed fortunes. Pharmaceutical giant Celltrion advanced 2.56 percent to 280,000 won.

Nature Cell, a biotech firm, plunged 12.24 percent to 17,200 won after reports surfaced that its office was raided by the prosecution on suspicion of stock price manipulation.

The tech-heavy Kosdaq lost 10.48 points, or 1.20 percent, to 864.56 amid investor concerns about the Fed rate hike and disappointment over the U.S.-North summit.

The Korean won closed at 1,083.10 won against the U.S. dollar, up 5.9 won from the previous session’s close.

Bond prices ended mixed. The yield on three-year bonds added 0.4 basis points to 2.23 percent, while the return on 10-year government bonds lost 1.0 basis points to 2.71 percent.


BY KIM EUN-JIN, YONHAP [kim.eunjin1@joongang.co.kr]


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