SEOUL, September 28 (AJP) -The South Korean bourse reopened after last week’s Chuseok holiday in a deeply sour mood, as foreign and institutional investors engaged in a panic-selling spree mostly targeting top chip stocks amid a global bond sell-off.
The Korea Composite Stock Price Index (KOSPI) fell 2.7 percent to close below 7,000 for the first time in four sessions.
Samsung Electronics lost 5.4 percent and SK hynix 5.1 percent, and foreign investors sold a net 3.23 trillion won ($2.4 billion), their second straight session of net selling.
The rest of the market held up. Rising stocks outnumbered decliners 611 to 249 on the main board, and the secondary KOSDAQ edged higher from its pre-holiday close on a limit-up rally in HLB after its U.S. drug approval.
The main index in Seoul shed 191.2 points to 6,889.7.
It opened at 7,057.9 and slid through the session, finishing just above its intraday low.
While Seoul was shut for Chuseok, the yield on the 30-year U.S. Treasury bond climbed to its highest level since 2004 and topped 5.5 percent. Seoul Economic Daily flagged the rise as a direct valuation risk for Korean tech and growth stocks.
Program trading added 2.14 trillion won ($1.6 billion) of net selling, almost all of it non-arbitrage basket orders, the type of selling that weighs on large-cap stocks more than on smaller ones.
Samsung Electronics closed at 270,000 won ($198), and its preferred shares fell 5.9 percent.
SK hynix ended at 1,768,000 won ($1,297). SK square dropped 7.6 percent to 1,100,000 won ($807). SK square is SK hynix's largest shareholder.
Institutions sold a net 1.02 trillion won ($746 million). Individual investors absorbed the selling with net purchases of 2.61 trillion won ($1.9 billion).
Battery and solar names moved against the slide. LG Energy Solution rose 3.6 percent to 364,000 won ($267), and Hanwha Solutions jumped 14.2 percent to 33,350 won ($24).
The KOSDAQ rose 2.1 points, or 0.3 percent, to 846.6.
HLB climbed the daily limit of 29.95 percent to 39,700 won ($29). Over the holiday, its U.S. unit, Elevar Therapeutics, won U.S. Food and Drug Administration (FDA) approval for lirafugratinib as a second-line treatment for a genetically defined form of bile duct cancer.
HLB group affiliates also hit their daily limits.
HLB said this was the first time a Korean drugmaker had filed directly with the FDA and won approval for a global cancer drug.
In China, the Shanghai Composite fell 1.7 percent to 3,820.8 after data showed industrial profits grew 4.2 percent in August.
Japan's Nikkei 225 lost 0.7 percent to 65,877.6.
Han Ji-young, an analyst at Kiwoom Securities, expects the KOSPI to trade around 7,000 this week. Han listed U.S. yields, U.S. jobs data, Korean exports and Micron's earnings as the main tests.
The breadth suggests investors were not passing judgment on Korean equities as a whole. But the main index cannot hold 7,000 without the two stocks foreigners are selling, and for now those stocks are trading on the U.S. long bond.
AJP Takeaways
- Samsung Electronics lost 5.4 percent and SK hynix 5.1 percent as foreign investors sold a net 3.23 trillion won ($2.4 billion), even though rising stocks outnumbered decliners 611 to 249.
- During the holiday, the 30-year U.S. Treasury yield topped 5.5 percent, its highest level since 2004.
Entity tags: KOSPI, KOSDAQ, Samsung Electronics, SK hynix, SK square, HLB, Elevar Therapeutics, U.S. Food and Drug Administration, LG Energy Solution, Hanwha Solutions, Kiwoom Securities, U.S. Treasury, Shanghai Composite, Nikkei 225, Micron, lirafugratinib
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