Seoul bourse falls to 1,977 on foreign selling

By Kang Seung-woo

Even the central bank's rate freeze failed to stop the Seoul bourse from suffering a plunge Friday as foreign investors continued to sell shares due to concerns on inflation and monetary tightening. The local currency also tumbled against the U.S. dollar.

The Korea Composite Stock Price Index (KOSPI) fell 31.31 points or 1.56 percent to 1,977.19, stretching a losing streak to a fourth session.

The benchmark index dropped below 2,000 for the first time this year, falling to its lowest level since Dec. 8 last year in terms of closing prices.

“Foreign investors felt pressure about possible monetary tightening and a need to lock in profits,” said a Seoul-based economist. “Hiking the key interest rate could have resolved some uncertainties in the market, but it wasn't positive enough to boost chilled market sentiment.”

Foreigners posted a net selling of 614.8 billion won, compared with about 1.1 trillion won on Thursday.

The Bank of Korea (BOK) kept its key interest rate on hold at 2.75 percent Friday as domestic and overseas uncertainties are feared to weaken the nation’s economic recovery.

Most sectors lost ground, with insurance and financial firms bearing the brunt of the rate freeze, as higher interest rates could have boosted their earnings. Samsung Life Insurance declined 2.83 percent to 103,000 won. Hana Financial Group dipped 5.66 percent to 42,500 won.

Tech blue chips were hit hard by heavy foreign sell-offs, as Samsung Electronics, a global leader in digital media and digital convergence technologies, fell 2.24 percent, while LG Display, the world’s No. 2 flat-screen manufacturer, suffered a 1.85 percent decrease.

Trading volume was moderate at 312 million shares worth 7.35 trillion won ($6.55 billion), with decliners trumping advancers 627 to 200.

The local currency closed at 1,128.6 won to the U.S. dollar, down 11.6 won from the previous close, as foreign investors cut local stocks.