August 2, 2019 / 4:25 AM / 19 days ago

S.Korea stocks slump after Japan takes Seoul off easy-trade list

    * KOSPI index drops 0.9%, foreigners net sellers
    * KOSPI set to decline for a second consecutive week
    * Korean won weakens versus U.S. dollar
    * South Korea benchmark bond yield drops

 (Recasts, adds quotes and details)
    SEOUL, Aug 2 (Reuters) - South Korean shares shed nearly 1%
on Friday as Japan's decision to remove Seoul from favoured
"white list" put further strain on the trade-dependent economy,
which was already reeling from U.S. President Donald Trump's
latest trade salvo to China. 
    Japan's cabinet approved a plan to remove the neighbouring
country from a list of countries that enjoy minimum export
controls, escalating bilateral dispute over compensation for
wartime forced labourers.             
    The decision would take effect from Aug. 28, Industry
Minister Hiroshige Seko told a briefing. 
    "Investor sentiment would be inevitably dampened due to
Japan's measure, which put more negative factors in addition to
Trump's tariff threat," Han Dae-hoon, an analyst at SK
Securities said in a note. 
    As of 0414 GMT, the Seoul stock market's main KOSPI        
was down 18.66 points or 0.92% at 1,998.68 points.
    "The negative factors led by Japan had already dented South
Korean stocks in July, so I expect the influence of the latest
decision to be limited," said Seo Sang-young, an analyst at
Kiwoom Securities.
    "It will affect some small- and mid-sized manufacturers,
which import precision machineries from Japan, as the decision
is expected to complicate import process," Seo added. 
    The benchmark index lost as much as 1.5% in early trade,
hitting its lowest since early January, but later recouped some
of the early losses. On a weekly basis, the KOSPI is set to
contract more than 3%, poised for its second straight weekly
decline.
    Foreigners were net sellers of 189.6 billion won ($158.57
million) worth of shares on the main board on Friday. 
    Stationery-maker Monami Co Ltd             jumped more than
11%, while apparel makers Shinsung Tongsang Co Ltd            
and Sbw Inc             added more than 3% each, as investors
expected their sales to grow as buyers stay away from Japanese
goods.             
    As worries over global supply chain prompted demand for
safe-haven bets, the South Korean won marked its lowest against
the Japanese yen since November 2016. The currency also matched
its lowest level versus the U.S. dollar since January 2017. 
    The won was quoted at 1,195.5 per dollar on the onshore
settlement platform           , 0.59% lower than its previous
close at 1,188.5.
    Meanwhile, U.S. President Donald Trump on Thursday said he
plans to impose a 10% tariff on $300 billion of Chinese imports
from next month and could raise tariffs further if China's
President Xi Jinping fails to move more quickly to strike a
trade deal. Trump's remarks pushed U.S. stocks lower.
            
    The KOSPI has dropped 2.07% so far this year, and lost 5.3%
in the previous 30 trading sessions. The trading volume during
the session in the KOSPI index         was 214.76 million shares
and, of the total traded issues of 887, the number of advancing
shares was 151.
    The won has lost 6.7% against the U.S dollar so far this
year, posting biggest losses among Asian currencies. 
            
    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 0.20 points to 111.00,
while the 3-month Certificate of Deposit rate was quoted at
1.50%.
    The most liquid 3-year Korean treasury bond yield fell by
6.0 basis points to 1.249%. 
    
    ($1 = 1,195.7200 won)    

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