S. Korean stocks plunge as rate cut hopes trigger heavy sell-off
South Korean stocks tumbled nearly 4 percent on Friday, ending a four-day winning streak, as weakening expectations for an imminent interest rate cut sparked a broad sell-off.
The Korean won, however, strengthened sharply against the U.S. dollar, News.Az reports, citing Yonhap.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 159.06 points, or 3.81 percent, to close at 4,011.57.
Trade volume was moderate, with 396.5 million shares valued at 17.9 trillion won (US$12.3 billion). Market breadth was weak, with losers outnumbering gainers 717 to 169.
Foreign and institutional investors drove the downturn, unloading 2.4 trillion won and 900.2 billion won worth of shares respectively. Retail investors, meanwhile, reversed their selling streak, turning net buyers with purchases totaling 3.2 trillion won.
“Shifts in rate cut expectations weighed on stocks, particularly in the tech sector. Markets worldwide are under pressure amid concerns that the artificial intelligence (AI) sector could be in a bubble,” said Lee Kyoung-min, analyst at Daishin Securities.
Lee added that recent hawkish remarks from U.S. Federal Reserve policymakers regarding the likelihood of a December rate cut further dampened investor sentiment.
The stock market fell despite South Korea and the United States having announced a joint fact sheet on the countries' trade deal reached over the two weeks since a summit meeting in the southeastern city of Gyeongju.
The U.S. has agreed to lower tariffs on Korean cars and auto parts from 25 percent to 15 percent and set semiconductor tariff rates "no less favorable" than those applied to Korea's competitors, such as Taiwan.
Seoul and Washington also signed a memorandum of understanding on Seoul's US$350 billion investment pledge, which includes $150 billion into America's shipbuilding sector.
In Seoul, most large-cap shares lost ground.
Market bellwether Samsung Electronics shed 5.45 percent to 97,200 won, while its chipmaking rival SK hynix dipped 8.5 percent to 560,000 won.
Battery maker LG Energy Solution fell 4.44 percent to 463,000 won, automotive giant Hyundai Motor shed 2.15 percent to 272,000 won and major portal operator Naver moved down 4.52 percent to 253,500 won.
Shipbuilder HD Hyundai Heavy Industries was among the few winners, rising 3.17 percent to 586,000 won, as investors anticipated further shipbuilding partnerships with the U.S.
The local currency was quoted at 1,457 won against the greenback as of 3:30 p.m., up 10.7 won from the previous session's close.
The Korean won rebounded from near its lowest level in 16 years, after authorities pledged to devise measures to stabilize the foreign exchange market.
Bond prices, which move inversely to yields, ended lower. The yield on three-year Treasurys rose 1.2 basis points to 2.944 percent, and the return on the benchmark five-year government bonds jumped 4.2 basis points to 3.126 percent.
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