ID :
208813
Thu, 09/22/2011 - 11:02
Auther :
Shortlink :
https://oananews.org//node/208813
The shortlink copeid
Seoul shares tumble 2.9 pct on recovery woes, banks rating cuts
(ATTN: ADDS bond yields at bottom)
SEOUL (Yonhap) - South Korean stocks tumbled 2.9 percent on Thursday as investor sentiment was chilled by the Federal Reserve's bleak assessment of the U.S. economy and credit downgrades of U.S. banks, analysts said. The local currency hit a 1-year low against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) shed 53.73 points to close at 1,800.55. Trading volume was moderate at 291.1 million shares worth 5.71 trillion won (US$4.84 billion) with losers outpacing gainers 689 to 167.
"The Fed's move to rebalance its bond portfolio did not meet market player's expectations, but the Seoul market's responses to a spate of negative news were quite excessive as the local currency's sharp weakness showed," said Kim Hyoung-ryoul, an analyst at Kyobo Securities Co.
The Fed's move to reallocate its bond portfolio failed to assure investors, who were awaiting more powerful stimulus steps to boost the fragile U.S. economy.
The Fed said on Wednesday that it will sell short-term Treasury bonds worth US$400 billion to purchase the same amount of longer-dated securities in a so-called "operation twist" program, by the end of June next year. The move aims to drive down long-term borrowing costs without further bloating its balance sheet.
The Fed presented a gloomy picture for the economic outlook, saying that there are "significant downside risks to the economic outlook, including strains in global financial markets."
Adding to concerns about the global recovery, Moody's Investors Service lowered the ratings of Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. Standard & Poor's also cut ratings of seven Italian banks.
Foreign investors dumped a net 308.2 billion won worth of local stocks on the main bourse.
Bank shares were hit hard, affected by credit downgrades in U.S. and Italian banks. Top banking group KB Financial Group declined 5.57 percent to 37,300 won and its rival Shinhan Financial Group shed 3.52 percent to 39,750 won.
Market bellwether Samsung Electronics lost 2.83 percent to 790,000 won and chip giant Hynix Semiconductor inched down 0.23 percent to 21,550 won.
Oil refiners lost ground on prospects that the global slowdown will curb demand for oil. Top refiner SK Innovation tumbled 7.06 percent to 158,000 won and its rival S-Oil lost 7.38 percent to 113,000 won.
The local currency closed at 1,179.8 won to the greenback, down 29.9 won from Wednesday's close, as offshore investors snapped up the greenback on risk aversion, dealers said. The Korean won fell to the lowest level since Sept. 2, 2010.
The dimmer economic outlook and fears about Europe's debt crisis revived demand for safe assets, causing the Korean currency to fall 5.7 percent to the greenback this week alone.
"The dollar gained ground to major currencies following the Fed's meeting. The local currency is expected to be under downward pressure for the time being on the eurozone debt crisis," said Jeon Seung-ji, a currency analyst at Samsung Futures Co.
The local currency hit an intra-day low of 1,180.10 won to the dollar at one point, but suspected dollar-selling intervention prevented the won from weakening below the 1,180-won level, they said.
A weaker won is expected to put upward pressure on inflation as it will make prices of imported products more expensive.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasuries declined 0.01 percentage points to 3.49 percent and the return on the benchmark five-year government bonds lost 0.01 percentage point to 3.62 percent.
SEOUL (Yonhap) - South Korean stocks tumbled 2.9 percent on Thursday as investor sentiment was chilled by the Federal Reserve's bleak assessment of the U.S. economy and credit downgrades of U.S. banks, analysts said. The local currency hit a 1-year low against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) shed 53.73 points to close at 1,800.55. Trading volume was moderate at 291.1 million shares worth 5.71 trillion won (US$4.84 billion) with losers outpacing gainers 689 to 167.
"The Fed's move to rebalance its bond portfolio did not meet market player's expectations, but the Seoul market's responses to a spate of negative news were quite excessive as the local currency's sharp weakness showed," said Kim Hyoung-ryoul, an analyst at Kyobo Securities Co.
The Fed's move to reallocate its bond portfolio failed to assure investors, who were awaiting more powerful stimulus steps to boost the fragile U.S. economy.
The Fed said on Wednesday that it will sell short-term Treasury bonds worth US$400 billion to purchase the same amount of longer-dated securities in a so-called "operation twist" program, by the end of June next year. The move aims to drive down long-term borrowing costs without further bloating its balance sheet.
The Fed presented a gloomy picture for the economic outlook, saying that there are "significant downside risks to the economic outlook, including strains in global financial markets."
Adding to concerns about the global recovery, Moody's Investors Service lowered the ratings of Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. Standard & Poor's also cut ratings of seven Italian banks.
Foreign investors dumped a net 308.2 billion won worth of local stocks on the main bourse.
Bank shares were hit hard, affected by credit downgrades in U.S. and Italian banks. Top banking group KB Financial Group declined 5.57 percent to 37,300 won and its rival Shinhan Financial Group shed 3.52 percent to 39,750 won.
Market bellwether Samsung Electronics lost 2.83 percent to 790,000 won and chip giant Hynix Semiconductor inched down 0.23 percent to 21,550 won.
Oil refiners lost ground on prospects that the global slowdown will curb demand for oil. Top refiner SK Innovation tumbled 7.06 percent to 158,000 won and its rival S-Oil lost 7.38 percent to 113,000 won.
The local currency closed at 1,179.8 won to the greenback, down 29.9 won from Wednesday's close, as offshore investors snapped up the greenback on risk aversion, dealers said. The Korean won fell to the lowest level since Sept. 2, 2010.
The dimmer economic outlook and fears about Europe's debt crisis revived demand for safe assets, causing the Korean currency to fall 5.7 percent to the greenback this week alone.
"The dollar gained ground to major currencies following the Fed's meeting. The local currency is expected to be under downward pressure for the time being on the eurozone debt crisis," said Jeon Seung-ji, a currency analyst at Samsung Futures Co.
The local currency hit an intra-day low of 1,180.10 won to the dollar at one point, but suspected dollar-selling intervention prevented the won from weakening below the 1,180-won level, they said.
A weaker won is expected to put upward pressure on inflation as it will make prices of imported products more expensive.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasuries declined 0.01 percentage points to 3.49 percent and the return on the benchmark five-year government bonds lost 0.01 percentage point to 3.62 percent.
