August 2, 2019 / 7:25 AM / 20 days ago

S.Korea stocks tumble as Japan takes Seoul off easy-trade list

    * KOSPI index drops nearly 1%, foreigners net sellers
    * KOSPI tumbles 3.3% for week 
    * Korean won marks lowest since Jan 2017 vs dollar
    * South Korea benchmark bond yield hits all-time low
    * For the midday report, please click             

 (Updates to market close)
    By Hayoung Choi
    SEOUL, Aug 2 (Reuters) - South Korean shares slumped 1% on
Friday as Japan's decision to remove Seoul from fast-track
export status put further strain on the trade-dependent economy,
which is already reeling from the broadening fallout of the
Sino-U.S trade war.     
    Japan's cabinet approved a plan to remove the neighbouring
country from a list of countries that enjoy minimum export
controls, prompting a warning from South Korean President Moon
Jae-in of retaliatory steps against Tokyo.             
            
    The decision would take effect from Aug. 28, Japan's
Industry Minister Hiroshige Seko told a briefing. 
    "It's hard to gauge its impact as of now. Japan may approve
some exports smoothly, while making the process difficult for
certain items," said Ku Yong-uk, chief of Mirae Asset Daewoo
research centre. 
     The Seoul stock market's main KOSPI         closed down
19.21 points or 0.95% at 1,998.13 points.
    "It will affect some small- and mid-sized manufacturers,
which import precision machineries from Japan," said Seo
Sang-young, an analyst at Kiwoom Securities.
    The benchmark index lost as much as 1.5% in early trade,
falling below the 2,000-point mark for the first time since Jan.
4, but later recouped some of the early losses. On a weekly
basis, the KOSPI tumbled 3.3% for its second straight week in
the red. 
    Foreigners were net sellers of 396.2 billion won ($330.79
million) worth of shares on the main board on the day, the most
since May 28. 
   Sentiment was already gloomy when trading began after U.S.
President Donald Trump on Thursday said he plans to impose a 10%
tariff on $300 billion of Chinese imports from next month in a
sharp escalation of the year-long trade dispute, sending global
stocks sliding and triggering a rush to safe-haven assets.
            
     There was some cheer for South Korean shares seen
benefiting from a boycott of Japanese goods. 
    Stationery-maker Monami Co Ltd             surged more than
17.4%, while apparel makers Shinsung Tongsang Co Ltd            
and Sbw Inc             rallied 6.5% and 4.2%, respectively.
            
    As investors piled into safe-haven assets, the South Korean
won hit its lowest against the Japanese yen since November 2016.
    Against the U.S. dollar, the won closed at its lowest level
since January 2017, with forex dealers suspecting authorities of
selling dollars to curb the currency's weakness.             
    The won was quoted at 1,198.0 per dollar on the onshore
settlement platform           , 0.79% lower than its previous
close at 1,188.5.
    The won has dropped 6.9% against the U.S dollar so far this
year, the biggest loss among Asian peers.             
     In money and debt markets, the benchmark 10-year bond yield
            hit an all-time low of 1.325%. September futures on
three-year treasury bonds         rose 0.18 points to 110.98,
while the 3-month Certificate of Deposit rate was quoted at
1.50%.
    The most liquid 3-year Korean treasury bond yield fell by
5.1 basis points to 1.258%.
        
($1 = 1,197.7500 won)    

 (Reporting by Hayoung Choi, Editing by Sherry Jacob-Phillips &
Shri Navaratnam)
  
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