South Korean shares end over 2% lower as surging US bond yields weigh

SEOUL: Round-up of South Korean financial markets:

South Korean shares dropped more than 2% on Wednesday, as investors returned from holidays with worries over a surge in U.S. Treasury yields.

The benchmark KOSPI closed down 59.38 points, or 2.41%, at 2,405.69, logging its lowest closing level since March 21 and the biggest one-day loss since March 14.

The domestic market was on a four-day holiday break till Tuesday.

U.S. Treasury yields rose to 16-year highs on a growing prospect of the Federal Reserve’s tight monetary policy continuing for longer.

The yields overshadowed optimistic domestic data – from August factory output growing at its fastest rate in more than three years, to September exports, which reported their mildest decline in 12 months.

“It is inevitable for the market to go through correction for some time, as there are not many events that can stop bond yields from rising immediately,” said Park Kwang-nam, an analyst at Mirae Asset Securities.

South Korea’s finance ministry and central bank said they would take market stabilising measures if needed.

Among index heavyweights, chipmaker Samsung Electronics fell 1.32% but peer SK Hynix gained 0.61%, while battery maker LG Energy Solution slumped 4.30%.

Major growth stocks of search engine Naver and instant messenger Kakao plunged 5.11% and 5.35%, respectively.

Samsung Biologics rose 1.47% as the biopharmaceutical manufacturer raised its revenue forecast.

Of the total 933 traded issues, only 77 shares advanced, while 835 declined.

Foreigners were net sellers of shares worth 399.3 billion won ($293.06 million) for the day on the main board.

The won ended onshore trade at 1,363.5 per dollar, 1.04% lower than its previous close. It was the currency’s weakest level since Nov. 10, 2022, and the worst daily performance in two months.

The most liquid three-year Korean treasury bond yield rose by 20.2 basis points (bps) to 4.077% and the benchmark 10-year yield by 32.1 bps to 4.333%. They hit their highest levels since early November 2022.