Seoul stocks drop to 13-month low ahead of Fed meeting

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,792 points on Monday, down 42.29 points, or 1.49 percent, from the previous trading day. [YONHAP]

Stocks plunged to a 13-month low Monday as investors dumped local stocks ahead of the U.S. Federal Reserve's policy meeting this week. The won fell against the dollar.

The benchmark Kospi dived 42.29 points, or 1.49 percent, to close at 2,792 points. The Kospi closed below the 2,800-point mark for the first time since Dec. 23, 2020.

Trading volume was moderate at about 468 million shares worth some 9.2 trillion won ($7.7 billion), with losers outnumbering gainers 817 to 86.

Foreigners dumped a net 435 billion won and retail investors offloaded 137 billion won, while institutions bought 593 billion won.

Selloffs were conspicuous in such growth stocks as tech companies that are usually more sensitive to high borrowing costs.

The U.S. Federal Reserve is widely expected to raise its policy interest rate in March. Investors are keeping a close eye on the Fed's two-day meeting that will start Tuesday, as it could provide clues on the direction of the U.S. central bank's monetary policy.

"Investors' eyes are on the upcoming January Federal Open Market Committee meeting and whether the Fed's stance would turn out more hawkish than the consensus," Korea Investment & Securities analyst Kim Dae-joon said.

Samsung Electronics shed 0.66 percent to 75,100 won, and chipmaker SK hynix closed unchanged from the previous session at 119,000 won.

Internet portal operator Naver closed down 1.35 percent to 328,500 won, chemical company LG Chem dipped 3.31 percent to 671,000 won, and pharmaceutical firm Samsung Biologics declined 0.86 percent to 811,000 won.

Automaker Hyundai Motor retreated 1.5 percent to 197,000 won, with financial heavyweight KB Financial Group losing 2.49 percent to 58,800 won.

The local currency closed at 1,196.1 won to the U.S. dollar, up 2.1 won from the previous session's close.

The Kosdaq lost 27.45 points, or 2.91 percent, to close at 915.40.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds dropped 2.1 basis points to 2.111 percent, and the yield on the benchmark 10-year government bond lost 4.8 basis point to 1.76 percent.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]