Kospi dips on concerns over U.S. easing

Korean shares fell 0.32 percent yesterday as foreign investors continued to take out their capital in the local stock market amid growing uncertainty ahead of the U.S. Federal Open Market Committee meeting this week. Concerns have been rising that the Fed may curtail or withdraw from its quantitative easing.

Investors have been watching U.S. data to assess whether the recovery in the world’s largest economy is strong enough to warrant a scaling back of stimulus.

The benchmark Kospi dropped 6.14 points to close at 1,883.1 yesterday at the Seoul bourse. While institutional investors net purchased local shares, retail and foreign investors dumped their investment.

Shares of Samsung Electronics fell 0.22 percent to close at 1.36 million won ($1,207) while shares of Posco also dropped 0.48 percent to 312,000 won. Shares of SK Hynix also fell 3.33 percent to 30,450 won while shares of NHN, the operator of the country’s largest portal Naver, fell 0.18 percent to 280,500 won.

Shares of Hyundai Mobis, on the other hand, gained 1.54 percent to 263,000 won while those of Kia Motors jumped 0.18 percent to 57,100 won.

Meanwhile, the Korean currency recovered from a near two-month low after the government said it has several market-stabilizing measures ready to protect against external shocks.

These include steps against a faster-than-expected U.S. exit from its quantitative easing policies, Finance Minister Hyun Oh-seok said in the legislature. Overseas investors sold more local shares than they bought for the seventh day, adding to $3.12 billion of net sales this month through June 14, exchange data shows. Almost $3 trillion has been erased from global markets since Federal Reserve Chairman Ben S. Bernanke said May 22 that U.S. policy makers could curb stimulus should the job market improve.

“Foreign investors sold Korean shares today, as they did last week, which weakened the won,” said Choi Sung-hyun, a currency trader at Woori Bank.

“Hyun’s comments about the government preparing measures to protect market volatility may have supported the won in the end.”

BY LEE EUN-JOO, BLOOMBERG [angie@joongang.co.kr]