August 6, 2019 / 2:32 AM / 3 months ago

S.Korea stocks down more than 1% as U.S.-China trade war escalates

    * KOSPI index hits lowest since Feb, 2016
    * Korean won turns higher vs U.S. dollar
    * South Korea benchmark bond yield rises

    By Hayoung Choi
    SEOUL, Aug 6 (Reuters) - South Korean shares fell more than
1% on Tuesday, marking the fifth consecutive session of losses,
after Washington designated Beijing a currency manipulator in a
further escalation of their trade conflict.
    U.S. Treasury Secretary Steven Mnuchin said on Monday the
government had determined that China was manipulating its
currency, and that Washington would engage the International
Monetary Fund to eliminate unfair competition from Beijing.
            
    As of 0205 GMT, the Seoul stock market's main KOSPI        
had dropped 24.23 points, or 1.24%, to 1,922.75 points. The
index fell as much as 2.8% in early trade, hitting the lowest
level since February 2016.
    "Uncertainties have grown as the friction between the United
States and China reached a boiling point," said Noh Dong-kil, an
analyst at NH Investment & Securities.
    Most leading KOSPI firms were in red, including SK Hynix
            and Hyundai Mobis            , which dropped 3% and
4%, respectively.
    South Korea's finance ministry said on Tuesday it is
monitoring markets closely and would act quickly if volatility
became excessive, while the central bank also held a meeting to
assess the market situation.             
    Japan's decision on Friday to remove South Korea from
fast-track export status put further strain on the trade-reliant
economy, sending the benchmark index plunging.             
    The junior KOSDAQ         stumbled as much as 5.1% on
Tuesday before giving up early losses.
    The Korean won turned higher with currency dealers
suspecting authorities had sold dollars to curb the currency's
weakness.
    The won was quoted at 1,213.1 per dollar on the onshore
settlement platform           , 0.18% higher than its previous
close at 1,215.3.
    On the main board, foreigners were net sellers of 221.2
billion won ($182.30 million) worth of shares.
    The KOSPI has fallen 5.80% so far this year, and has lost
8.4% in the previous 30 trading sessions. The won has lost 8.0%
against the U.S dollar so far this year, making it the biggest
percentage loser among its major Asian peers.             
    In money and debt markets, September futures on three-year
treasury bonds         fell 0.03 points to 111.23, while the
3-month certificate of deposit rate was quoted at 1.50%.
    The most liquid 3-year Korean treasury bond yield rose by
1.8 basis points to 1.190%, while the benchmark 10-year yield
rose by 2.6 basis points to 1.278%.
 ($1=1,213.4 won)

 (Reporting by Hayoung Choi)
  
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