Shares plunge 2 percent following surprise rate cut

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Shares plunge 2 percent following surprise rate cut

Published: 29 Nov. 2024, 17:13

KIM JU-YEON
[email protected]

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,455.91 points on Friday, down 1.95 percent, or 48.76 points, from the previous trading session. [YONHAP]

Shares fell nearly 2 percent Friday as the Bank of Korea's (BOK) surprise policy rate cut and a bleak economic outlook stoked fears of economic slowdown. The won rose in value against the dollar.

The Kospi shed 48.76 points, or 1.95 percent, to close at 2,455.91.

Trade volume was moderate at 377.33 million shares worth 8.91 trillion won ($6.39 billion) with losers far outnumbering winners 723 to 170.

Foreigners sold a net 749.36 billion won worth of shares while retail and institutional investors bought a net 590.44 billion won and 48.04 billion won worth of shares, respectively.

“The BOK's reduction of its economic growth outlook for next year below 2 percent has affected investor sentiment,” said Seo Sang-young, an expert at Mirae Asset Securities.

The central bank on Thursday unexpectedly slashed its key rate by a quarter of a percentage point to 3 percent, noting that the decision was meant to mitigate economic downside risks amid slowing export growth and uncertainty stemming from the upcoming Trump administration.

Government data released Friday also showed that the country's industrial output, retail sales and facility investment had all fallen on-month in October.

Losses were deep and wide across the board, with tech shares leading the fall of the index.

Tech firm Samsung Electronics fell 2.34 percent to 54,200 won, and chipmaker SK hynix lost 0.74 percent to close at 159,900 won.

Electric vehicle battery maker LG Energy Solution plunged 5.22 percent to 381,500 won, and chemical producer LG Chem dropped 6.89 percent to 284,000 won.

Pharmaceutical firm Samsung Biologics slid 2.5 percent to 975,000 won, and KB Financial dived 1.84 percent to 96,200 won.

Carmakers ended lower, with Hyundai Motor slipping 0.23 percent to 218,500 won, and its affiliate, Kia, retreating 2.21 percent to 92,900 won.

Steelmaker Posco Holdings dipped 4.4 percent to 282,500 won, but Korea Zinc, the world's largest zinc smelter, surged 3.24 percent to 1.18 million won.

K-pop firm HYBE went down 4.08 percent to 195,200 won after girl group NewJeans said it would terminate its contract with its agency, ADOR, which is one of HYBE's labels.

The local currency was trading at 1,394.7 won against the greenback at 3:30 p.m., down 0.9 won from the previous session.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds fell 3.1 basis points to 2.604 percent, and the return on the benchmark 10-year U.S. government bonds dropped 0.7 basis points to 4.261 percent.

BY KIM JU-YEON, YONHAP [[email protected]]