South Korean shares fall over 1% after Fed chief’s comment; won hits 13-year low

SEOUL: Round-up of South Korean financial markets:

South Korean shares closed more than 1% lower after a volatile session on Thursday, as the U.S. central bank chief acknowledged the possibility of a recession. The Korean won weakened below 1,300 per dollar for the first time since July 2009, while the benchmark bond yield fell.

The benchmark KOSPI ended down 28.49 points, or 1.22%, at 2,314.32 - the lowest close since Nov. 2, 2020. It rose 0.79% before reversing course to fall as much as 1.55%.

U.S. Federal Reserve Chair Jerome Powell said on Wednesday the central bank is not trying to engineer a recession to stop inflation, but acknowledged that it is “certainly a possibility.”

Risks of Fed rate hikes leading to weaker demand for durable goods will be critical to manufacturing exporters like South Korea, said Cape Investment and Securities’ analyst Na Jeong-hwan.

South Korea’s finance minister said authorities would work to minimise any adverse impact from a weakening won and take steps to stabilise the foreign exchange market if necessary.

Among heavyweights, technology giant Samsung Electronics lost 0.35% and peer SK Hynix dropped 2.17%, while battery maker LG Energy Solution inched down 0.25%.

Foreigners were net sellers of 296.3 billion won ($227.50 million) worth of shares on the main board, extending their selling streak to a fifth session.

Of the total traded issues of 930 on the benchmark KOSPI, only 77 shares advanced.

The won was last quoted 0.35% lower at 1,301.8 per dollar on the onshore settlement platform, after hitting the lowest since July 14, 2009, at 1302.8.

In offshore trading, the won was quoted down 0.3% at 1,301.4 per dollar, while in non-deliverable forward trading its one-month contract was quoted at 1,300.2.

In money and debt markets, September futures on three-year treasury bonds fell 0.07 point to 103.36 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 1.1 basis points to 3.569%, while the benchmark 10-year yield fell by 3.2 basis points to 3.671%.