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Monday, December 11 2023

Seoul: Stocks dip to 20-month low on recession fears

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Photo Credit : IANS

Seoul:  South Korean stocks dipped to a 20-month low Wednesday, as bleak data from Europe and a sharp fall in oil prices underscore worries over a global economic recession. The Korean won fell sharply against the US dollar.

The Korea Composite Stock Price Index (KOSPI) retreated 49.77 points, or 2.13 per cent, to close at 2,292.01, coming below the 2,300 mark for the first time since October 30, 2020, Yonhap news agency reported.

Trading volume was moderate at 400.3 million shares worth 8.53 trillion won (US$6.53 billion) with decliners outstripping gainers 697 to 177.

“The looming recession issue dampens investor sentiment in the stock market, which is heavily influenced by exports,” said Seo Sang-young, an analyst at Mirae Securities Co.

“And the won’s steep fall against the dollar can have a negative impact on the inflow of foreign funds.”

In Seoul, foreigners and institutions turned to a selling mode, unloading a net 313.8 billion won and a net 623 billion won, respectively. Individual investors snapped up a net 896.5 billion won.

Fears of recession were fuelled by downbeat data from the eurozone, with the euro sinking to its weakest level against the US dollar in nearly two decades and with oil futures also tumbling.

Earlier this week, Germany reported a trade deficit for May, the first such headline in more than 30 years, amid a deepening energy crisis due to Russia’s war in Ukraine.

Investors will look to the US Federal Reserve’s latest minutes due out Wednesday (US time) as they seek clues to the Fed’s next move in the monetary tightening ahead of the meeting slated for later this month, analysts said.

Large-cap tech and refinery stocks led the KOSPI’s fall. Market heavyweight Samsung Electronics lost 1.4 percent to 56,400 won and top refiner SK Innovation slumped 5.26 percent to 171,000 won on a decline in oil prices.

No. 1 automaker Hyundai Motor also dipped 2.82 per cent to 172,500 won and steel giant POSCO Holdings slid 3.56 percent to 230,000 won.

In contrast, top battery maker LG Energy Solution soared 2.49 per cent to 370,500 won on news that it will supply batteries to Japanese commercial vehicle maker Isuzu for its electric trucks in a deal reportedly valued at 1 trillion won.

The local currency ended at 1,306.40 won against the U.S. dollar, down 6.1 won from Tuesday’s close, the lowest since July 13, 2009, when the won ended at 1,315 per the greenback.

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