Stocks drop as investors go to ground ahead of Fed

A screen at Hana Bank's trading room in central Seoul shows the Kospi closing at 2,975.71 points on Wednesday, down 37.78 points, or 1.25 percent, from the previous trading day. [YONHAP]

Stocks declined more than 1 percent Wednesday as investors seek clues on the timeline for the tapering with the U.S. Federal Reserve meeting this week in focus. The won fell against the dollar.

The benchmark Kospi lost 37.78 points, or 1.25 percent, to close at 2,975.71 points.

Trading volume was moderate at about 649 million shares worth some 12.3 trillion won ($10.4 billion), with losers outnumbering gainers 684 to 187.

Foreigners sold a net 449 billion won, while retail investors bought 845 billion won. Institutions offloaded a net 422 billion won.

The key stock index retreated as investors took to the sidelines on expectations that the Fed may hasten its timeline for potential rate hikes to vent the rising inflation pressure.

The Fed is set to reveal its meeting results Wednesday.

"Investors seem to be bracing for a hawkish announcement," said Eugene Investment & Securities analyst Huh Jae-hwan.

A slump in techs, chemicals and autos led the overall market decline.

Samsung Electronics lost 1.54 percent to 70,400 won, and chipmaker SK hynix decreased 1.86 percent to 105,500 won.

Internet portal operator Naver lost 1.83 percent to 402,500 won, and Kakao fell 2.73 percent to 124,500 won.

LG Chem dipped 5.66 percent to 784,000 won, while Samsung SDI edged up 0.14 percent to 732,000 won.

Carmaker Hyundai Motor retreated 0.71 percent to 208,500 won, and its sister company Kia fell 1.16 percent to 85,000 won.

Pharmaceutical firm Samsung Biologics closed unchanged at 874,000 won, and Celltrion increased 1.69 percent to 210,000 won.

Kakao Pay, the mobile payment service arm of Kakao, closed at 193,000 won on its first day of trading, more than doubling its initial public offering price of 90,000 won.

The Kosdaq lost 4.44 points, or 0.44 percent, to close at 1,005.00.

The local currency closed at 1,181.6 won against the dollar, up 7.2 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds shed 0.4 basis point to 2.036 percent, while the yield on the benchmark 10-year government bond fell 0.9 basis point to 1.55 percent.

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