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Stocks decline 1% despite return of optimism

Jan 09,2020
Stocks dipped more than 1 percent Wednesday on escalating military tensions in the Middle East that are feared to push up global oil prices. The won fell sharply against the dollar.

The Kospi lost 24.23 points, or 1.11 percent, to close at 2,151.31, after dipping to an intraday low of 2,137.72 points. Trading volume was heavy at nearly 900 million shares worth over 8.6 trillion won ($7.34 billion), with losers greatly outnumbering winners 847 to 48.

The index remained sharply lower throughout the session after getting off to a rough start on reports of Iran attacking several U.S. military bases in Iraq in response to the U.S. killing Iranian Maj. Gen. Qassim Suleimani.

The head of Iran’s Quds Force was killed in Baghdad late last week in a U.S. drone attack.

Washington has yet to confirm any casualties from Iran’s missile attacks but earlier said any attack by Iran would be met by additional strikes against multiple Iranian targets.

Market observers here, however, insisted the U.S.-Iran conflict will likely be short-lived.

“The geopolitical risks have heightened following Iran’s missile attack on U.S. military bases. However, their impact on the financial market is expected to be limited, and one of the reasons is because U.S. President Donald Trump is considered to use a ‘hard talk, but soft stick’ [approach],” NH Investment & Securities analyst Cho Yeon-ju said.

Yoon Yeo-sam, an analyst at Meritz Securities, agreed the U.S. president is unlikely to commit to a full-fledged war with Iran, especially ahead of the presidential election this year.

“I believe it will end up being a short-term conflict,” Yoon said.

Foreigners remained net buyers, purchasing a net 259.5 billion won, while institutions offloaded a net 239.6 billion won. Retail investors dumped a net 19.5 billion won.

Most large caps ended up in negative terrain despite Samsung Electronics greatly advancing on an estimate-beating fourth-quarter earnings forecast.

Samsung Electronics surged 1.79 percent to close at 56,800 won, while SK Hynix spiked 3.62 percent to an all-time high of 97,400 won.

Automaker Hyundai Motor, on the other hand, plunged 3.03 percent to 112,000 won, with Kia Motors tumbling 1.78 percent to 41,300 won.

The secondary Kosdaq shed 22.50 points, or 3.39 percent.

Bond prices, which move inversely to yields, closed higher. The yield on three-year bonds added 3.3 basis point to 1.362 percent, while the return on 10-year government bonds added 1.3 basis points to 1.82 percent.

BY KIM YEON-AH, YONHAP [kim.yeonah@joongang.co.kr]


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