S.Korean stocks slide to 2-month low on trade worries, weak earnings

Hanssem Co

29/07/2019 08:27

* KOSPI index drops 1.8%, foreigners net sellers
    * Korean won strengthens versus U.S. dollar
    * South Korea benchmark bond yields down 
    * For the midday report, please click  urn:newsml:reuters.com:*:nL4N24U08S

    By Hayoung Choi
    SEOUL, July 29 (Reuters) - South Korean shares shed nearly
2% on Monday, as tensions with Japan added more pressure on the
export-dependent economy already reeling from weak global demand
and the U.S.-China tariff war.
    The Seoul stock market's main KOSPI index  .KS11  stumbled
1.78% to 2,029.40 points, closing at its lowest since late May.
The junior KOSDAQ index  .KQ11  closed down 4%. 
    "Downside risks on the South Korean economy have grown due
to Japanese export restrictions, while a big deal between the
United States and China seems unlikely," said Kim Ji-hyung, an
analyst at Hanyang Securities.    
    "Weak corporate earnings also weighed on the markets," he
added.
    Chipmakers Samsung Electronics  005930.KS  fell 2.2%, while
SK Hynix  000660.KS  slumped 3.5%. 
    Japan said earlier this month it would tighten restrictions
on exports of high-tech materials used for making memory chips
and display panels to South Korea. 
    South Korea's exports are expected to contract for the
eighth straight month as a trade rift with Japan drags on the
economy, according to analysts polled by Reuters.  urn:newsml:reuters.com:*:nL4N24U0TN 
    U.S. and Chinese trade negotiators will meet in Shanghai
this week for their first in-person talks since a G20 truce last
month. However, expectations were low for a breakthrough with
U.S. President Donald Trump offering a pessimistic view on
reaching a trade deal with China.  urn:newsml:reuters.com:*:nL2N24R1PQ  urn:newsml:reuters.com:*:nL2N24R0MN
    Shares of Ssangyong Motor  003620.KS  and furniture maker
Hanssem  009240.KS  plunged after the firms posted weak
second-quarter results. Ssangyong, owned by India's Mahindra and
Mahindra  MAHM.NS , closed down 8%, while Hanssem shares shrank
16%.  urn:newsml:reuters.com:*:nL4N24U0MM
    South Korea's central bank delivered a surprise interest
rate cut in July to counter deteriorating economic conditions
and the U.S. Federal Reserves is broadly expected to cut its
benchmark rate by a quarter point at its July 30-31 meeting. 
    "Despite the rate cut by the Bank of Korea, the parliament's
approval of the extra budget bill has been delayed, providing no
fresh momentum to financial markets," Kim noted. 
    Foreigners were net sellers of 62.5 billion won ($52.82
million) worth of shares on the main board, marking their first
net selling in 11 consecutive sessions. Foreigners' buying of
chip giants including SK Hynix had supported the broader market
this month, but they locked in profits on Monday, analysts said.
    The trading volume during the session on the KOSPI index
 .KS11  was 596.17 million shares and, of the total traded
issues of 892, the number of advancing shares was 74.
    The Korean won strengthened versus the dollar. The won was
quoted at 1,183.5 per dollar on the onshore settlement platform
 KRW=KFTC , 0.11% higher than its previous close at 1,184.8.
    The currency has lost 5.7% against the U.S dollar so far
this year.
    In money and debt markets, September futures on three-year
treasury bonds  KTBc1  rose 0.01 points to 110.84, while the
3-month Certificate of Deposit rate was quoted at 1.53%.
    The most liquid 3-year Korean treasury bond yield fell by
0.1 basis points to 1.307%, while the benchmark 10-year yield
fell by 1.1 basis points to 1.413%.
    
   ($1 = 1,183.3100 won)    

 (Editing by Jacqueline Wong)
 ((hayoung.choi@thomsonreuters.com; +82 2 3704 5643; Reuters
Messaging: hayoung.choi.thomsonreuters.com@reuters.net))