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Views Article – Sharenet Wealth

Asia, Forex

S.Korea stocks tumble as Japan takes Seoul off easy-trade list

* KOSPI index drops nearly 1%, foreigners net sellers * KOSPI tumbles 3.3% for week * Korean won marks lowest since Jan 2017 vs dollar * South Korea benchmark bond yield hits all-time low * For the midday report, please click (Updates to market close) By Hayoung Choi SEOUL, Aug 2 (Reuters) – South Korean shares slumped 1% on Friday as Japan’s decision to remove Seoul from fast-track export status put further strain on the trade-dependent economy, which is already reeling from the broadening fallout of the Sino-U.S trade war. Japan’s cabinet approved a plan to remove the neighbouring country from a list of countries that enjoy minimum export controls, prompting a warning from South Korean President Moon Jae-in of retaliatory steps against Tokyo. The decision would take effect from Aug. 28, Japan’s Industry Minister Hiroshige Seko told a briefing. “It’s hard to gauge its impact as of now. Japan may approve some exports smoothly, while making the process difficult for certain items,” said Ku Yong-uk, chief of Mirae Asset Daewoo research centre. The Seoul stock market’s main KOSPI closed down 19.21 points or 0.95% at 1,998.13 points. “It will affect some small- and mid-sized manufacturers, which import precision machineries from Japan,” said Seo Sang-young, an analyst at Kiwoom Securities. The benchmark index lost as much as 1.5% in early trade, falling below the 2,000-point mark for the first time since Jan. 4, but later recouped some of the early losses. On a weekly basis, the KOSPI tumbled 3.3% for its second straight week in the red. Foreigners were net sellers of 396.2 billion won ($330.79 million) worth of shares on the main board on the day, the most since May 28. Sentiment was already gloomy when trading began after U.S. President Donald Trump on Thursday said he plans to impose a 10% tariff on $300 billion of Chinese imports from next month in a sharp escalation of the year-long trade dispute, sending global stocks sliding and triggering a rush to safe-haven assets. There was some cheer for South Korean shares seen benefiting from a boycott of Japanese goods. Stationery-maker Monami Co Ltd surged more than 17.4%, while apparel makers Shinsung Tongsang Co Ltd and Sbw Inc rallied 6.5% and 4.2%, respectively. As investors piled into safe-haven assets, the South Korean won hit its lowest against the Japanese yen since November 2016. Against the U.S. dollar, the won closed at its lowest level since January 2017, with forex dealers suspecting authorities of selling dollars to curb the currency’s weakness. The won was quoted at 1,198.0 per dollar on the onshore settlement platform , 0.79% lower than its previous close at 1,188.5. The won has dropped 6.9% against the U.S dollar so far this year, the biggest loss among Asian peers. In money and debt markets, the benchmark 10-year bond yield hit an all-time low of 1.325%. September futures on three-year treasury bonds rose 0.18 points to 110.98, while the 3-month Certificate of Deposit rate was quoted at 1.50%. The most liquid 3-year Korean treasury bond yield fell by 5.1 basis points to 1.258%. ($1 = 1,197.7500 won) (Reporting by Hayoung Choi, Editing by Sherry Jacob-Phillips & Shri Navaratnam)


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