Korean won, shares tumble on U.S. rate rise concerns

The Korean won and stocks tumbled Monday as strong U.S. job data increased expectations that the U.S. central bank would raise its interest rate sooner than projected.

The won-dollar exchange rose 13.4 won to 1,112.1 won as investors offloaded their Korean won holdings for the dollar, making the won weaker. This is the first time that the won-dollar exchange rose above the 1,110 mark since Dec. 8, 2014, at 1,117.7 won.

U.S. job data showed Friday that its unemployment rate reached 5.5 percent last month, the lowest in 6 1/2 years.

This led investors to forecast that the Federal Reserve may drop its “patience” and tighten its monetary policy soon amid increasing jobs and wages. The Fed had signaled that it could start raising the rate in June.

On the same day, the Korea Composite Stock Price Index dipped below 2,000. The KOSPI started the day at 2,004.94, up 0.40 percent, and closed at 1,992.82, down 1 percent.

The tech-heavy KOSDAQ also finished at 629.27, down 1.03 percent.

“The KOSPI is expected to continue its rollercoaster ride throughout the week, but most likely will settle above 2,000,” said Kang Hyun-cheol, head of the investment strategy unit at NH Investment and Securities.

Kang advised that investors maintain their investment in the KOSPI heavyweight blue chip stocks until Thursday when options are due, recommending stocks of brokerages, IT components and construction.

Korean stocks fell below the 2,000 threshold as concerns over a rate rise deepened.

Shares of the KOSPI’s top three heavyweights ― Samsung Electronics, Hyundai Motor and SK hynix ― dropped simultaneously.

Korea’s top market cap Samsung Electronics lost 1.53 percent, while Korea’s auto giant Hyundai Motor slipped 2.31 percent. Korea’s second-largest memory chipmaker SK hynix shed 2.38 percent.

The country’s big three mobile carriers also followed suit ― SK Telecom dropped 1.41 percent, KT 0.81 percent and LG Uplus 0.43 percent.

Among the top 10 market cap stocks, only Cheil Industries rose about 3 percent.

By Chung Joo-won (joowonc@heraldcorp.com)