Seoul stocks tumble to 4-year low, Korean won up

SEOUL, Mar 11, 2020, Yonhap. Seoul stocks dropped by almost 3 percent on Wednesday to hit the lowest in almost 4 years on growing skepticism about the U.S.’s stimulus plans to counter the new coronavirus and an extended sell-off by foreign investors. The Korean won rose slightly against the U.S. dollar, Yonhap reported.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 54.66 points, or 2.78 percent, to 1,908.27, the lowest level since February 17, 2016, when the index closed at 1,883.94 points. The index dipped to as low as 1,898.27 points at one point.

Trading volume was moderate at 662.82 million shares worth 8.07 trillion won (US$7.5 billion), with losers far outnumbering gainers 800 to 81.

Investors dumped local stocks amid risk-off sentiment amid concern about a possible recession caused by a prolonged COVID-19 outbreak, analysts said.

“The coronavirus is spreading fast in Europe and the United States, adding a new level of panic to the financial markets. Moreover, investors appear to have some doubt about whether the U.S. government’s tax cuts and other stimulus measures can pass Congress due to opposition from the Democratic Party,” Mirae Asset Daewoo analyst Park Hee-cheol said.

Foreigners and institutions sold a combined 1.16 trillion won worth of stocks, exceeding individuals’ stock purchases valued at 1.08 trillion won.

In particular, foreigners continued to dump local stocks after offloading 3 trillion won worth of stocks in the past four sessions.

On Tuesday, the KOSPI ended 0.4 percent higher at 1,962.93, rebounding from a six-week low sparked by growing coronavirus concerns and a crash in oil prices.

Monday’s stock sell-off was fueled by the virus’s continued global spread and by Saudi Arabia, the world’s largest oil exporter, starting an oil price war with Russia, slashing its selling prices and pledging to unleash pent-up supply to markets already suffering lower demand.

As of Wednesday, South Korea has reported a total of 7,755 confirmed coronavirus cases and 60 deaths.

Large-cap stocks declined across the board.

Market bellwether Samsung Electronics Co. fell 4.6 percent to 52,100 won, No. 2 chipmaker SK hynix Inc. declined 4.0 percent to 85,500 won, national flag carrier Korean Air Lines Co. shed 3.4 percent to close at 22,750 won, and leading refiner SK Innovation Co. was down 2.5 percent at 98,000 won.

Among gainers, No. 3 refiner S-Oil Corp. rose 2 percent to 62,500 won and Lotte Chemical Corp. climbed 1.1 percent to 185,000 won.

The local currency closed at 1,193.00 won against the U.S. dollar, up 0.20 won from the previous session’s close.

Bond prices, which move inversely to yields, closed down. The yield on three-year Treasurys fell 0.4 basis point to 1.086 percent, and the return on the benchmark five-year government bond declined 1.1 basis points to 1.194 percent.