Kospi drops 2 percent as Covid situation worsens overseas

A screen shows the closing figure for the Kospi in a trading room at Hana Bank in Jung District, central Seoul, on Tuesday. [YONHAP]

Stocks dipped more than 2 percent on Tuesday, as investor sentiment worsened over dimming hopes for recovery from the coronavirus pandemic in major economies. The won fell against the dollar.

The Kospi tumbled 56.8 points, or 2.38 percent, to close at 2,332.59.

Trading volume was high at about 1 billion shares worth some 17.5 trillion won ($15 billion), with losers outnumbering gainers 816 to 80.

The Kospi plunged after losing nearly 1 percent in the previous session.

The decline is largely blamed on strong foreign and institutional sell-off, driven by slow progress in U.S. stimulus talks and fears of economic lockdown in Europe, analysts said.

"Fears of possible lockdown in Europe and the stalled [U.S.] stimulus talks seem to have worsened the tech valuation problem at home," Choi Yoo-joon, a researcher at Shinhan Financial Investment, said.

Foreigners sold a net 230 billion won and institutions dumped a net 769 billion won. Individuals bought a net 992 billion won.

Stocks losses widened after U.S. Federal Reserve Chairman Jerome Powell said a full recovery from the pandemic will take a considerably long time.

In a related move, former Food and Drug Administration Commissioner Scott Gottlieb said the United States may experience "at least one more cycle" of the virus by the end of the year.

The Kospi's fall was further accelerated by investors' profit-taking before the Chuseok holiday, from Sept. 30 to Oct. 4, when U.S. political uncertainties are expected to rise, local analysts said.

In Seoul, most large caps closed lower.

Market bellwether Samsung Electronics lost 1.69 percent to 58,200 won, and No. 2 chipmaker SK hynix dipped 3.79 percent to 81,300 won.

Pharmaceutical firm Samsung Biologics retreated 1.22 percent to 731,000 won, and Celltrion shed 3.77 percent to 268,000 won.

Internet portal Naver dipped 2.57 percent to 284,500 won, with its rival Kakao down 3.16 percent to 353,000 won.

Chemical maker LG Chem gained 1.91 percent to 639,000 won, and rechargeable battery maker Samsung SDI edged up 0.11 percent to 446,500 won.

Hyundai Motor shed 2.97 percent to 179,900 won, while steelmaker Posco advanced 1.83 percent to 194,500 won.

The local currency closed at 1,165 won per dollar, up 7 won from the previous session's close.

The Kosdaq dropped 24.27 points, or 2.80 percent, to close at 842.72.

Bond prices, which move inversely to yields, closed higher. The yield on three-year bonds lost 0.7 basis points to 0.897 percent, and the return on 10-year bonds lost 3.2 basis points to 0.66 percent.

BY LEE JEE-YOUNG, YONHAP [lee.jeeyoung1@joongang.co.kr]