Missile incident takes steam out of KospiKorean stocks fell to a 14-month low Wednesday as investors were jittery over volatility in the currency market and a report that Iran test-fired missiles, analysts said. The local currency surged against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 14.09 points, or 0.9 percent, to 1,519.38. Volume was moderate at 323.6 million shares worth 5.2 trillion won ($5.1 billion), but gainers outnumbered losers 421 to 386.
The KOSPI fell to the lowest level since April 19, 2007 when the index reached 1,513.66. The index also hit the lowest mark for this year.
“The Seoul bourse reversed earlier gains as sentiment was dented by a report on Iran’s missile test,” said Kim Hak-kyun, an analyst at Korea Investment and Securities. “Fluctuation in the currency market itself serves as a risk factor to the sentiment.”
Kim added investors also took a breather ahead of a rate decision by the central bank due Thursday amid increasing inflation risks.
The Seoul bourse got off to a strong start following overnight gains in U.S. markets, but it reversed earlier gains on news that Iran test-fired missiles including a long-range one capable of reaching Israel, sparking concerns over a possible jump in oil prices.
Foreign investors unloaded a net 170.9 billion won worth of local stocks, continuing their selling spree for the 23rd straight session, weighing on the market.
“The stock sale by foreigners is expected to continue since concerns over a global credit crunch persist,” analyst Kim said.
Tech blue chips traded in negative territory. Market leader Samsung Electronics fell 3.0 percent to 575,000 won and flat-panel giant LG Display tumbled 6.3 percent to 34,350 won.
But after surging to 58,700 won, top lender Kookmin Bank closed 2 percent higher at 56,100 won, shrugging off concerns that it may not have enough capital to turn itself into a holding company.
U.S. stocks closed higher Tuesday on a drop in oil prices and comments by Fed Chairman Ben Bernanke that the U.S. central bank may extend emergency lending facilities for banks. The Dow Jones industrial average gained 1.4 percent and the tech-dominated Nasdaq composite index rose 2.3 percent.
Bond prices, which move inversely to yields, rose on the won rally. The return on three-year Treasuries fell 0.03 percentage point to 5.99 percent and the benchmark yield on five-year government bonds shed 0.06 percentage point to 6.06 percent.