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Escalating trade war continues to hurt Kospi

May 17,2019
Local stocks sank 1.2 percent Thursday on the escalating trade war between the United States and China, with Washington vowing to ban foreign telecom equipment, analysts said. The won again lost ground against the dollar.

The benchmark Kospi plunged 25.09 points, or 1.2 percent, to close at 2,067.69. Trading volume was moderate at 733 million shares worth 5.96 trillion won ($5 billion), with losers outpacing gainers 542 to 297.

U.S. President Donald Trump signed an executive order that centers on banning the use of foreign telecommunications devices, citing national security, apparently targeting Chinese brands such as Huawei.

“The tension is escalating between Washington and Beijing after Trump announced the order aimed at protecting U.S. telecommunication technology and services,” said Yoon Jung-sun, a researcher at KB Securities.

Seoul shares started nearly flat over reports that Trump will delay his decision on imposing higher auto tariffs on imported cars and that there could be an exemption for Korea from the penalties.

But the market went south in the afternoon session on expanded sell-offs by foreign investors.

Foreigners went on a selling spree with a net 467 billion won sold, while institutions dumped a net 37 billion won. Retail investors scooped up 409 billion won net.

Samsung Electronics dipped 2.35 percent, to 41,550 won, and No. 2 chipmaker SK Hynix lost 3.49 percent, to close at 71,900 won. Major electronics firm LG Electronics moved down 2.07 percent, to 71,000 won.

Samsung BioLogics dropped 3.39 percent, to 299,500 won after prosecutors raided a task force office of Samsung Electronics as part of an investigation into allegations that Samsung Group may have been involved in accounting fraud by its biopharmaceutical unit.

Steelmakers lost ground, with Posco falling 1.88 percent, to 235,500 won, and Korea Zinc decreasing 3.1 percent, to 422,000 won. Hyundai Steel shed 1.64 percent, to reach 41,950 won.

The secondary Kosdaq nosedived 12.01 points, or 1.65 percent, to close at 717.59.

The won closed at 1,191.50 won against the dollar, up 2.90 won from the previous session. The figure reached 1,192.40 won against the dollar during the session, its lowest figure since the 1,202.00 won posted on Jan. 11, 2017.

Bond prices, which move inversely to yields, ended higher. The yield on three-year bonds lost 3.5 basis points to 1.675 percent, and the return on 10-year bonds fell 4.5 basis points to 1.820 percent.


BY KO JUN-TAE, YONHAP [ko.juntae@joongang.co.kr]


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