External events help move market lower

Korean stocks closed 1.24 percent lower yesterday due to earning shock and negative external events, such as the Boston Marathon bombing and concerns over the Chinese government debt.

The won fell against the greenback.

The benchmark Kospi lost 23.78 points to finish at 1,900.06, the lowest level of the year as foreigners continued to sell. Foreign investors sold $3.8 billion more equities than they bought this year through yesterday, exchange data show.

Trading volume stood at 336.9 million shares worth 4.2 trillion won ($3.74 billion) with losers outnumbering gainers.

LG Display, which supplies touch screens for Apple, dropped 4.8 percent to 29,800 won after audio chip maker Cirrus Logic reported an inventory glut that suggests iPhone sales may fall short of expectations.

Market behemoth Samsung Electronics ended at 1,483,000 won, down 2.31 percent or 35,000 won from the previous day.

Hyundai Motor, Posco, Kia Motors and SK Hynix fell 1 percent to 2 percent.

The won had its largest decline in more than a week as overseas investors shunned riskier assets amid concerns about weakness in the global economy.

The won slipped 0.5 percent to 1,123.69 per dollar, according to data, the biggest drop since April 8.

Government bonds gained.

The yield on Korea’s 2.75 percent government bonds due in March 2018 dropped three basis points to 2.66 percent, the lowest level in a week, according to Korea Exchange.

“There are prevailing concerns that economies around the world may not recover soon, driving the won lower as investors seek safer assets like the dollar,” said Jeon Seung-ji, an analyst at Samsung Futures in Seoul. “Speculation that foreign investors are repatriating dividend income is also weakening the won, while exporters selling proceeds may limit further declines.”

Korea unveiled a proposed 17.3 trillion won supplemental budget this week to revive an economy that grew last year at its slowest pace since 2009.

By Kim Jung-yoon, Bloomberg [kjy@joongang.co.kr]