Shares down 1.48% on Fed disappointment

Korean stocks closed 1.48 percent lower on Wednesday as investor sentiment took a blow from U.S. Fed Chairman Ben Bernanke’s bleak economic outlook, analysts said. The local currency climbed against the U.S. dollar.

The benchmark Korea Composite Stock Price Index slumped 27.05 points to 1,794.91. Trading volume was moderate at 448.5 million shares worth 4.4 trillion won ($3.9 billion), with decliners outnumbering gainers 658 to 169.

“Bernanke’s gloomy economic outlook as well as weakening hopes over a third round of quantitative easing hurt investor sentiment,” said Eom Tae-woong, an analyst at Bookook Securities Co.

“While Bernanke left the door open for stimulus measures, his comments apparently didn’t live up to expectations,” said Eom.

Speaking at a semi-annual Congressional testimony, the U.S. Fed chief painted a gloomy picture of the U.S. economy and added policymakers may consider stimulus measures if situations worsen.

Investor sentiment was further worsened by North Korea’s surprise announcement that its young leader Kim Jong-un has been awarded the title of marshal, the top commander of the North’s 1.2-million-strong army.

Tech shares closed bearish after Intel Corp., the world’s largest chipmaker, cut its earnings forecast for the year, citing global economic woes. Samsung Electronics fell 1.2 percent to 1,154,000 won and SK Hynix tumbled 4.93 percent to 20,250 won.

Shipbuilders also closed lower. Top player Hyundai Heavy Industries lost 4.19 percent to 228,500 won despite clinching a combined $780 million of contracts.

Major bank shares were hit by the anti-trust watchdog’s probe over rate-rigging allegations. The Fair Trade Commission, which launched a probe into brokerage companies on suspicions they colluded to fix rates on 91-day certificates of deposits, expanded the probe into four local banks. Shinhan Financial Group fell 2.13 percent to 36,800 won.

In contrast, defensive shares outperformed the KOSPI. Top mobile carrier SK Telecom closed 1.88 percent higher at 135,500 won.

The local currency ended at 1142.6 won to the greenback, up 1 won from Tuesday’s close, amid lingering expectations of the Fed’s quantitative easing, dealers said. (Yonhap News)