Seoul shares down on rate hike, Ukraine woes

South Korean stocks ended lower Wednesday, as the US central bank’s more hawkish stance on rate hikes sparked worries about a global economic slowdown amid uncertainties surrounding Ukraine and China’s growth. The Korean won fell against the US dollar.

The benchmark Korea Composite Stock Price Index lost 24.17 points, or 0.88 percent, to close at 2,735.03 points.

Trading volume was moderate at around 1.29 billion shares worth some 10.85 trillion won (US$8.90 billion), with losers outnumbering gainers 584 to 275.

Foreigners and institutions sold stocks worth 584.3 billion won and 564 billion won, respectively, while retail investors picked up shares worth 1.13 trillion won.

The market opened lower, tracking losses on Wall Street, and extended losses, as US Federal Reserve Gov. Lael Brainard warned of stronger actions regarding rate hikes to curb inflation.

Brainard, who is also the Fed vice chair nominee, also hinted at a balance sheet reduction starting next month.

Later in the day, the Fed plans to release the minutes from its March meeting, during which it raised interest rates for the first time since 2018.

“The hawkish comments from one of the Fed’s dovish policymakers suggest a more aggressive policy path forward, which stoke fears of the economic slowdown. The market could experience high volatility for the time being,” Kiwoom Securities analyst Han Ji-young said.

Uncertainties surrounding the Ukraine crisis continued, as the European Union on Tuesday discussed additional sanctions against Russia over its invasion of Ukraine.

Adding to woes are potential disruptions of global supply chains, as China extended a lockdown in Shanghai amid soaring virus cases. The restrictions were imposed March 28 and supposed to be lifted Tuesday.

The World Bank warned Asian countries of three major economic risks this year — the Ukraine crisis, the Fed’s rate hikes and the economic slowdown in China — while lowering China’s growth forecast to 5 percent this year from last year’s 8.1 percent.

Most large-cap shares finished lower, with tech and chemicals leading the overall market falls due to profit-taking.

Market bellwether Samsung Electronics fell 1.01 percent to a 16-month low of 68,500 won, and major chipmaker SK hynix sank 3.00 percent to 113,000 won.

Major battery maker LG Energy Solution lost 1.00 percent to 444,500 won, and Samsung SDI shed 0.33 percent to 598,000 won. LG Chem went down 1.85 percent to 530,000 won.

But insurers gathered ground on hope for better earnings aided by envisioned rate hikes.

Samsung Life rose 0.92 percent to 65,600 won, and DB Insurance jumped 4.18 percent to 72,300 won.

The local currency closed at 1,218.30 won against the US dollar, down 5.6 won from the previous session’s close. (Yonhap)

By Kim Young-won (wone0102@heraldcorp.com)