Korean large-cap stocks plunge on fears of recession

An electronic board set up in a dealing room at Hana Bank's headquarters in Seoul shows a drop of the benchmark KOPSI and a rise of the won-dollar exchange rate, Tuesday. Yonhap

By Lee Min-hyung

Korea's large-cap stocks plunged Tuesday on deepening fears of recession and growing burden over possible additional rate hikes by the U.S. Fed.

The benchmark KOSPI closed with a loss of 1.83 percent at 2,192.07 from the previous trading day, falling below the 2,200-point mark again on institutional investors' mass selling spree. The secondary Kosdaq also fell sharply, closing at 669.5, down 4.15 percent during the same period.

The Korean won also weakened further against the dollar. The won-dollar exchange rate closed at 1,435.2 won per dollar, up 22.8 won from the previous session.

The poor performance of leading stocks pulled down the main bourse. Shares of Samsung Electronics, the nation's most valuable firm by market capitalization, extended their losses with a drop of 1.42 percent. Samsung's shares soared to a new high of 90,000 won early last year, but have since lost the momentum for a rebound, closing at 55,400 won per share on Tuesday. The firm's dismal stock performance is attributable to an earnings fall and U.S. restrictions on tech exports to China.

Shares of SK hynix, another major semiconductor manufacturer here, also tumbled. Its shares closed at 90,200 won, down 1.1 percent from a day earlier.

Large-cap internet stocks also failed to recover from their recent sharp decline. Kakao shares once topped 170,000 won last year, but ended up closing at 50,100 won, down 1.57 percent, on the prevailing outlook of a growth slowdown. Kakao is the nation's first-generation mobile platform operator, hitting the jackpot with its mobile messenger, KakaoTalk, back in early 2010s.

Naver, the top internet portal operator here, also plunged for a similar reason. The company is considered one of the major growth stocks along with Kakao, but its stock value nosedived on a similar course as Kakao. Naver shares closed at 158,500 won, down 0.94 percent from the previous trading day. The stock price of Naver set a historic high of more than 460,000 won last year during the then-stock market boom driven by massive liquidity.

Market experts also remained pessimistic over a possible rebound of the local stock market due to multiple financial uncertainties represented by the U.S. Fed's rate hikes and growing recession fears.

“Fed officials still maintain their hawkish rhetoric and the growth forecast of the global economy is also expected to be revised down further, which are two key factors that will block KOSPI's long-term rebound,” NH Investment & Securities analyst Kim Young-hwan said.