Korea stocks, won tumble as foreigners dump $1 bn in equity futures

South Korean stocks and the won currency lost ground with the main Kospi ending below the 3,100 mark for the first time in five weeks as foreign investors dumped more than $1 billion in equity futures. The sell-off came as a jump in the US Treasury yield boosted concerns over fund outflows from emerging markets, pushing the won to a one-year low.

The Kospi on Sept. 28 lost 1.14% to finish at 3,097.92, closing below the 3,100 level for the first time since Aug. 23 when the index ended at 3,090.21.

Foreign investors sold a net 1.25 trillion won ($1.06 billion) in futures, the largest daily selling in seven weeks. That knocked down futures prices, prompting domestic institutional investors who work on arbitrage trading in spots and futures to unload relatively expensive spot stocks, dragging the Kospi lower. Local institutional investors sold a net 555.1 billion won in the Kospi market.

All of the top 10 stocks in terms of market capitalization fell except LG Chem Ltd., which rose 0.78%. Samsung Electronics Co. skidded 1.8%, while Naver Corp. and Samsung Biologics lost 2.61% and 5.33%, respectively.

The junior Kosdaq also ended down 2.61% at 1,012.51 as foreign investors and domestic institutions sold a net 207.5 billion won and 236.7 billion won in the market.

LITTLE MOMENTUM FOR KOSPI REBOUND

Such losses came as the 10-year US Treasury yield topped 1.5%, while the won declined 0.6% to 1,184.4 against the dollar, the softest domestic close since Sept. 11, 2020.

“A surge in the US Treasury yield pushed down the tech-oriented Nasdaq yesterday, hurting markets here,” said HI Investment & Securities analyst Cho Ik-jae. “Soaring oil and natural gas prices are accelerating inflation. That could lift interest rates further.”

South Korean stock markets are unlikely to find bullish factors for the time being, according to analysts.

“There is little momentum for a rebound until the beginning of the next year,” said NH Investment & Securities research head Oh Tae-dong.

He expected the Kospi to move in a range between 3,050 and 3,250 in the fourth quarter.

SK Securities’ research center head Choi Seok-won predicted a rise in the Kospi only with strong corporate earnings and economic indicators.

Write to Hyung-gyo Seo at seogyo@hankyung.com
Jongwoo Cheon edited this article.