Quick Bit: South Korean stock market shares dropped by slightly over two percent on Monday to reach a one-year low, Yonhap News Agency reported.
“The benchmark Korea Composite Stock Price Index (KOSPI) slumped 49.9 points, or 2.04 percent, to close at a fresh 19-month low of 2,391.03 points. The index dipped to an intraday low of 2,372.35 points,” the Seoul-based Yonhap reported on June 20.
Further detailing South Korea’s stock market activity on Monday, Yonhap wrote:
Trading volume was moderate at about 583 million shares worth some 9 trillion won (US$7 billion), with losers outnumbering gainers 585 to 62.
Foreigners dumped a net 662 billion won, while institutions bought 446 billion won and retail investors purchased 183 billion won.
After a weak start, the KOSPI increasingly lost ground, led by chipmakers and other market heavyweights.
Seoul shares dipped on Monday “as investors were gripped by fears that a recession in the global economy may come amid faster-than-expected monetary tightening in major economies,” Yonhap observed.
“The Fed’s (hawkish) stance has kept the overall investor sentiment weak,” South Korean financial analyst Park Gwang-nam, from Mirae Asset Securities, told the news agency on June 20.
Park and Yonhap referred to the U.S. Federal Reserve’s decision on June 15 to raise its interest rate by three-quarters of a percentage point in an effort to combat record-high inflation. The action marked the largest interest rate hike by the U.S. Federal Reserve since 1994, though it was “widely expected by investors,” according to Reuters.
“Ending weeks of speculation, the rate-setting Federal Open Market Committee took the level of its benchmark funds rate to a range of 1.5%-1.75%, the highest since just before the Covid [Chinese coronavirus] pandemic began in March 2020,” CNBC reported on June 16.
“Stocks were volatile after the decision but turned higher as Fed Chairman Jerome Powell spoke in his post-meeting news conference,” the financial news outlet observed.
“Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common,” U.S. Federal Reserve Chairman Powell said on June 15.
“He added, though, that he expects the July [U.S. Federal Reserve] meeting to see an increase of 50 or 75 basis points. He said decisions will be made ‘meeting by meeting’ and the Fed will ‘continue to communicate our intentions as clearly as we can,'” CNBC relayed of Powell’s remarks.
The South Korean stock market’s immediate reaction to the U.S. Federal Reserve’s interest rate spike on June 15 was nearly the exact opposite of its activity on June 20.
“South Korean shares rose more than 2% on Thursday [June 16] to snap [a] seven-day losing streak, after the U.S. central bank delivered a 75-basis point rate hike as expected. The Korean won gained, while the benchmark bond yield fell,” Reuters reported.
South Korea’s domestic currency, the Korean won, closed on June 20 at 1,292.4 won against the U.S. dollar. The dip marked a decrease of 5.1 Korean won from the previous session’s close, according to Yonhap.
Originally found on Breitbart Read More