Seoul stocks slip over 1% amid uncertainty on U.S. rates

South Korean shares plunged over 1%, driven by concerns over future U.S. interest rates. Foreign investors sold a net 354 billion won worth of shares, halting a seven-day buying streak, while retail investors bought a net 415 billion won.

Investor sentiment in South Korea took a hit on Thursday as the nation’s shares dipped by more than 1%, driven by apprehensions surrounding the future trajectory of U.S. interest rates ahead of the upcoming release of inflation data. The local currency also faced downward pressure against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) experienced a decline of 32.91 points, marking a 1.2% drop, to conclude at 2,712.14.

Trading activity remained moderate, with a volume of 413 million shares valued at 10.9 trillion won (approximately U.S.$7.95 billion). Losers outnumbered gainers significantly, with 531 stocks ending in the red against 355 in the green.

Foreign investors were noted to have offloaded a net 354 billion won worth of local shares, putting an end to their seven-day streak of buying. Meanwhile, retail investors countered this trend by purchasing a net 415 billion won, whereas institutions sold a net 75.9 billion won.

The concerns were exacerbated by remarks from Susan Collins, President of the Federal Reserve Bank of Boston, who suggested that achieving the target inflation of 2% might take longer than previously anticipated.

Lee Jae-won, an analyst from Shinhan Securities, commented on the impact of Collins’ statements, stating, “Susan Collins’ hawkish comments raised concerns about prolonged monetary tightening, dampening investors’ appetite for risky assets.”

The decline in the stock market was further attributed to the expiration of options contracts.

Key players in the market, including tech giants Samsung Electronics and SK hynix, experienced declines of 1.97% and 1.46%, respectively. Notably, South Korea’s leading online portal operator Naver saw a 1.36% drop amid pressure from Japan following a data leakage incident last year.

Automobile manufacturers also witnessed significant decreases, with Hyundai Motors and Kia losing 2.07% and 3.71%, respectively.

However, energy firms bucked the trend, with Korea Electric Power Corp. rising by 1.4% and Korea Gas advancing by 1.27%.

In the foreign exchange market, the local currency closed at 1,370.1 won against the U.S. dollar, down 8.6 won from the previous session’s close. Bond prices saw a decline as yields rose, with the yield on three-year Treasurys gaining 1.4 basis points to 3.453%, and the return on the benchmark five-year government bonds increasing by 1.7 basis points to 3.490%.