South Korean stocks dropped 0.98 percent Thursday, extending the losing streak for a fifth consecutive session, as the U.S. Federal Reserve's minutes reaffirmed a gradual scaling-back of its bond-buying program, analysts said. The local currency fell against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) closed down 18.34 points to 1,849.12, the lowest since July 10. Trading volume was moderate at 418 million shares worth 4.19 trillion won (US$3.74 billion) with decliners far outnumbering gainers 693 to 122. The KOSPI has dropped 3.7 percent this week.
"While the Fed has reached a consensus (to cut the stimulus), they're split as to when the tapering should begin. Such a reservation increases chances of a more volatile market, until the August U.S. employment data are released," said Chun Jeong-hoon, an analyst at Kiwoom Securities Co.
The U.S. central bank's July minutes, released overnight, showed that Fed officials agreed to the reduction of its aggressive bond purchases, otherwise known as QE3, crafted to support its slowing economy.
But the Fed again avoided to state the timing of the stimulus cut in the transcript, only intensifying the possibility of a September retreat speculated by many analysts. U.S. policymakers have said it will keep the near-zero rate as part of its easy-money policy until the unemployment rate falls to 6.5 percent. The rate stood at 7.4 percent in July.
Most shares lost ground across the board, with brokerage houses and machinery companies leading the decline. Mirae Asset Securities Co., a major brokerage firm, tumbled 6.79 percent to 32,950 won.
Doosan Heavy Industries, a heavy equipment maker, plunged 5.88 percent to 41,600 won.
Among large-caps, Samsung Life Insurance and the world's top shipyard Hyundai Heavy Industries finished the session bearish, dipping 2.37 percent to 103,000 won and 1.87 percent to 210,000 won, respectively.
The local currency ended at 1,123.00 won against the greenback, down 5.6 won from Wednesday's close, as foreigners opted to sell off local equities amid a stronger dollar, dealers said. Overseas investors dumped a net 101.6 billion won worth of shares on the Seoul bourse. (Yonhap News)
