Seoul: South Korean stocks closed lower on Wednesday, bringing a halt to a three-day winning streak as retail investors took profits following a recent rally in tech and shipbuilding shares. The local currency, the Korean won, experienced its sharpest increase against the U.S. dollar in over three years, prompted by strong verbal intervention from foreign exchange (FX) authorities.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) started the day on a positive note but closed 8.7 points, or 0.21 percent, lower at 4,108.62. Trade volume was moderate, with 351.5 million shares traded valued at 11.95 trillion won (approximately US$8.2 billion). The day saw more losers than winners, with 481 stocks declining compared to 378 that gained.
Despite strong overnight gains on Wall Street, driven by better-than-expected U.S. growth data and a bullish trend in blue-chip tech stocks, retail investors in Seoul sold off 717.5 billion won in shares, driven by profit-taking sentiment. Conversely, foreign investors and institutions continued their buying spree, purchasing a net 520 billion won and 200 billion won worth of local shares, respectively.
In currency markets, the Korean won was quoted at 1,449.8 per U.S. dollar at 3:30 p.m., representing a significant increase of 33.8 won from the previous session's close. This marked the most considerable gain in more than three years. The steep climb came after FX authorities stated that an excessively weak won was "not desirable" and pledged their "strong commitment" to stabilizing the market.
The intervention comes as the won has hovered near its weakest level against the dollar in 16 years, despite several stabilization measures. In the stock market, tech giant Samsung Electronics saw a modest decline of 0.36 percent, while SK hynix gained 0.68 percent. Automakers Hyundai Motor and Kia posted gains, as did LG Energy Solution and SK Square.
Doosan Group surged nearly 4 percent on acquisition expectations, while POSCO Group climbed 3.29 percent. However, Young Poong plummeted 9.32 percent after a court dismissed its injunction request related to Korea Zinc's investment plans in the U.S.
Shipbuilders experienced significant declines following previous gains, with Hanwha Ocean, HD Korea Shipbuilding, and HD Hyundai Heavy all losing ground. Major players in the bio and defense sectors, including Samsung Biologics and Hanwha Aerospace, also saw declines.
Lee Kyoung-min, an analyst at Daishin Securities, commented that the KOSPI's decline came despite continued foreign and institutional buying, as retail investors sought to capitalize on recent bullish stocks. The FX volatility further dampened investor risk appetite.
In the bond market, prices rose as yields fell. The yield on three-year Treasurys decreased by 2.4 basis points to 2.939 percent, while the five-year government bond yield dropped by 3.1 basis points to 3.211 percent.