Seoul stocks sharply drop on soaring oil prices

South Korean stocks plunged over 2 percent Monday amid worries tough sanctions imposed on Russia in retaliation against its invasion of Ukraine could raise energy prices and hurt companies' bottom lines. The Korean won steeply fell against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 62.12 points, or 2.29 percent, to close at 2,651.31 points.

Trading volume was moderate at about 557 million shares worth some 11.9 trillion won ($9.7 billion), with losers outnumbering gainers 755 to 141

Foreigners dumped a net 1.17 trillion won worth and institutions offloaded 960 billion won, while retail bought 2.1 trillion won.

Stocks retreated for a second straight session on the escalating geopolitical tensions in Ukraine.

Investors' appetite for risky assets decreased as Brent crude hit an intraday high of $139 a barrel, the highest since 2008, following reports the US and its allies are working on an embargo on oil exports by Russia over its invasion of Ukraine.

"Oil prices soared with the intensifying tensions (over Ukraine), adding to the concerns that the rising prices may pressure the economy," said Daeshin Securities analyst Lee Kyung-min.

"The combination of rising prices, bond yield rates and economic circumstances seem to be weighing on the (financial) markets," he said.

Most large caps closed lower due to foreign and institutional sell-offs.

Market bellwether Samsung Electronics lost 1.96 percent to 70,100 won, and No. 2 chipmaker SK hynix declined 4.02 percent to 119,500 won.

Internet portal operator Naver retreated 3.31 percent to 307,000 won, and top carmaker Hyundai Motor decreased 2.61 percent to 168,000 won.

Leading chemical firm LG Chem moved down 3.93 percent to 514,000 won, with car battery maker LG Energy Solution dropping 3.38 percent to 414,000 won.

The local currency closed at 1,227.1 won against the US dollar, sharply down 12.9 won from the previous session's close.

It marked the first time since June 2, 2020, that the Korean currency fell to touch the 1,220-won per-dollar level during the session. The won hit an intraday low of 1,228 against the greenback.

South Korea's foreign exchange authorities made verbal intervention, saying they were closely monitoring the market to see if there were speculative movements by offshore investors or excessive jitters by market participants.

Market experts said the local currency may weaken to the 1,250-won level against the greenback if the geopolitical risk stemming from Ukraine crisis continues. (Yonhap)