Stocks drop on U.S. debt concern, Evergrande worries

A screen in Hana Bank's trading room in central Seoul shows the Kospi falling below the 3,000-point mark. The Kospi closed at 2,962.17 points on Tuesday, down 57.01 points, or 1.89 percent, from the previous trading day. [NEWS1]

Stocks plunged to an almost seven-month low Tuesday, as investor sentiment was weakened by the debt ceiling tussle in the United States and debt crises involving Chinese property developers. The won closed unchanged against the dollar.

The benchmark Kospi tumbled 57.01 points, or 1.89 percent, to close at 2,962.17 points, the lowest finish since March 10.

Trading volume was moderate at about 830 million shares worth some 15.1 trillion won ($12.7 billion), with losers outnumbering gainers 702 to 202.

Foreigners sold a net 621 billion won, while retail investors bought 355 billion won. Institutions purchased a net 235 billion won.

Local stocks got off to a weak start, falling below the 3,000-point threshold for the first time in about six months. The Korean stock market was closed Monday due to an extended holiday tied to the Oct. 3 National Foundation Day.

An impasse over the U.S. debt ceiling raised concerns that the U.S. faces risks of a default and it may deal a blow to President Joe Biden's big spending plan. Energy prices stayed high, adding to the worries of a slowdown in global economic recovery.

The tech-heavy Nasdaq composite plunged 2.14 percent, with the S&P 500 losing 1.3 percent. The Dow Jones Industrial Average retreated 0.94 percent.

A failed debt payment by Chinese property developer Fantasia Holdings Group also fanned anxiety, in addition to the ongoing default crisis involving Evergrande Group.

"Issues like the U.S. debt ceiling and the China Evergrande crisis, in addition to inflation concerns from supply bottlenecks, are expected to linger for a while, generating uncertainties in the stock markets," Eugene Investment & Securities analyst Huh Jae-hwan said.

Samsung Electronics declined 1.37 percent to 72,200 won, and chipmaker SK hynix fell 2.1 percent to 97,900 won.

Internet portal operator Naver moved down 3.01 percent to 370,500 won, and chemical firm LG Chem decreased 2.99 percent to 747,000 won.

The Kosdaq fell 27.83 points, or 2.83 percent, to close at 955.37.

The local currency closed at 1,188.7 won against the dollar, unchanged from the previous session's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds added 1.7 basis points to 1.65 percent, and the yield on the benchmark 10-year government bond gained 1.9 basis points to 1.48 percent.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]