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South Korean stocks drop, currency weakens as oil prices push higher

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Electronic signboards at Hana Bank’s dealing room shows Kospi, Kosdaq prices and the won-dollar currency rate on Tuesday. YONHAP NEWS AGENCY

South Korean stocks drop, currency weakens as oil prices push higher

South Korea’s benchmark Kospi and the Korean won tumbled on March 8, with surging oil prices triggered by the US-led ban on Russian crude threatening to fuel the intensifying inflationary pressure here.

The main bourse Kospi settled 1.09 per cent down from the previous session at 2,622.4, falling for the third consecutive day.

Foreigners offloaded a net 472.8 billion won ($382.2 million) worth of shares, while institutions sold a net 293 billion won. Retail investors bought a net 732 billion won.

The weak performance followed an overnight plunge on Wall Street, which saw its biggest drop in more than a year, taking its cue from the growing possibility of the US banning barrels from Russia, the world’s second-largest exporter of crude.

The benchmark S&P 500 shed 2.9 per cent to 4,201.09, its sharpest decline in 16 months. The Dow Jones Industrial Average fell 2.4 per cent to 32,817.38, while the Nasdaq composite tumbled 3.6 per cent to 12,830.96.

West Texas Intermediate crude futures, the US oil benchmark, closed at $119.40 per barrel on March 7 (Eastern Standard Time) up 3.2 per cent, after touching $130.50 earlier in the day. Brent crude, the international standard, closed at $123.21 per barrel, up 4.3 per cent, after earlier hitting $139.

“Market fears are being fed by the Ukraine crisis becoming more prolonged than expected and concerns of higher inflation growing on the possibility the US could bar crude imports from Russia,” Han Ji-young, an analyst at Kiwoom Securities, said.

“Korea’s stock market is expected to be under downward pressure stemming from concerns of a global economic contraction today,” he added.

The value of the Korean won continued to weaken against the US greenback, surpassing the 1,230 won-mark for the first time since May 2020. It settled at 1,237 won against the dollar, 0.53 per cent higher from the previous session.

The local currency on March 7 breached the 1,220 won-mark for the first time against the dollar since June 2, 2020, spurring concerns surrounding the current strong dollar trend.

“The won-dollar currency rate in the next three months will likely fluctuate and the won may weaken less in value, but the strong dollar trend is likely to continue for the rest of the year,” NH Investment & Securities analyst Kwon Ah-min said.

“The pressure on global energy prices in the near future is closely tied with how central banks around the world will play out their monetary policy normalisation.”

Market behemoth Samsung Electronics fell below 70,000 won and closed 0.86 per cent lower from the previous session at 69,500 won.

The nation’s number two chipmaker SK hynix shed 1.26 per cent to 118,000 won, while top chemical firm LG Chem inched down 2.14 per cent to 503,000 won.

Top internet portal operator Naver slid 0.81 per cent to close at 304,500, failing to extend the gain it saw earlier.

The secondary tech-heavy bourse Kosdaq closed 1.29 per cent lower from the previous closing at 870.14.

THE KOREA HERALD/ASIA NEWS NETWORK

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