SEOUL– South Korean stocks fell nearly 2 percent on Friday, snapping a three-day winning streak as foreigners and institutions dumped shares after recent rallies fueled by optimism over a possible downshift in U.S. rate hikes. The local currency inched down against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) retreated 45.51 points, or 1.84 percent, to 2,434.33. Trading volume was moderate at 462.1 million shares worth 7.2 trillion won (US$5.53 billion), with decliners outnumbering gainers 604 to 262.
“It seems only a matter of time before we start to see more U.S. economic indexes showing signs of a slowdown,” Han Ji-young, an analyst at Kiwoom Securities Co., said.
“The Fed, of course, acknowledges this slowdown issue. Since the core consumer prices and core personal spending have peaked, the Fed will adjust its speed in the interest rate hikes in the December policy meeting,” Han said.
Latest U.S. data showed its manufacturing contracted last month for the first time in 2 1/2 years, with a measurement of consumer spending having risen at a slower-than-expected pace in October, an indication that the Federal Reserve’s aggressive monetary tightening is cooling the economy.
Stocks have rallied this week as Fed Chair Jerome Powell and other Fed policymakers suggested the central bank is heading for a slowdown of rate hikes, after four successive 75 basis-point increases to tame runaway inflation.
Market watchers have priced in for a 50 basis point increase by the Fed in the December monetary policy meeting.
In Seoul, foreigners and institutions opted to unload their holdings, selling off a net 403.3 billion won and 508.5 billion won, respectively. Individual investors bought a net 908.7 billion won worth of stocks.
Stocks fell across the board. Market bellwether Samsung Electronics sank 3.5 percent to 60,400 won and chip giant SK hynix dipped 3.3 percent to 81,900 won.
Auto blue-chips Hyundai Motor and Kia lost 1.5 percent to 169,000 won and 3 percent to 66,500 won, respectively.
Cosmetics companies, however, ended higher amid positive outlooks after China’s lifting of a ban on Korean cultural and other content. Industry leader Amorepacific jumped 2.7 percent to 131,500 won and LG Household & Health Care shot up 3.7 percent to 670,000 won.
The South Korean won ended at 1,299.90 won against the U.S. dollar, down 0.20 won from Thursday’s close.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys slid 3.4 basis points to 3.616 percent and the return on the benchmark five-year government bonds fell 5 basis points to 3.632 percent.
Source: Yonhap News Agency