SEOUL, Oct. 22 (AJP) - South Korean stocks fell 3.5 percent on Thursday, wiping out the previous session's gains, as the Bank of Korea paused its rate tightening while leaving the door open to further hikes. The move added pressure to a chip rally that was already losing momentum.
The benchmark KOSPI shed 201.89 points or 3.52 percent to close at 5,533.77.
Samsung Electronics lost 4.0 percent and SK hynix 5.5 percent as foreigners turned net sellers again after a single day of buying. The tech-heavy KOSDAQ dropped 3.6 percent, and Japan's Nikkei 225 slid 2.7 percent.
The decline came after the Bank of Korea's Monetary Policy Board, the central bank's seven-member rate-setting committee, unanimously voted to keep the base rate at 3.0 percent, following quarter-point increases in July and August.
The board said inflation would likely stay above the 2 percent target for a considerable period. Governor Shin Hyun-song said the timing and pace of further hikes would depend on incoming data including third-quarter gross domestic product and consumer prices.
Shin described the pause as a kind of "hoe work," referring to a Korean proverb about fixing a problem early with a hoe to avoid having to use a spade later. He had used the same analogy to justify the rate hikes last summer.
Forecasters treat the pause as a breather rather than an end to tightening. In a Seoul Economic Daily survey before the board's meeting, 18 of 20 economists and market experts expected another increase next month.
The main index in Seoul opened below Wednesday's close, briefly climbed above it, then turned down around the rate announcement and touched 5,486 at its weakest.
Local brokerages tied the slide to the bank's tightening message, profit-taking after Wednesday's chip-led surge, and renewed doubts over the cost of artificial intelligence (AI)-related spending after Meta Platforms' quarterly results.
Samsung Electronics fell to 214,500 won (US$162.05) and SK hynix dropped to 1,223,000 won. The two chipmakers handed back most of the 5.7 percent and 5.8 percent gains each stock posted a day earlier.
Foreigners net sold 113.2 billion won of shares, and institutions sold 307.2 billion won. Individual investors absorbed the selling with net purchases of 400.9 billion won.
Decliners outnumbered gainers 710 to 173 on the main board.
The junior KOSDAQ fell 28.66 points or 3.62 percent to 764.10. Its loss was steeper than the main board's and erased its own 1.4 percent advance from Wednesday.
The won firmed against the dollar even as foreigners sold, trading at 1,323.7 per dollar, 3.8 won stronger than its previous close.
The Nikkei 225 in Tokyo shed 1,713.4 points to 62,907.8, reversing Wednesday's gain.
Thursday's drop leaves the main index in Seoul 41.0 percent below its 52-week high of 9,385.6. A recovery now depends on U.S. big-tech earnings, which set the tone for the chip trade, and on a November rate meeting where most forecasters expect the Bank of Korea to hike again.
AJP Takeaways
- The Bank of Korea held its base rate at 3.0 percent on Oct. 22 and signaled further increases after hikes in July and August, and South Korean stocks traded the signal rather than the hold.
- Samsung Electronics and SK hynix gave back most of their Oct. 21 rally on Oct. 22, and foreign investors resumed net selling of South Korean stocks after one day of buying.
- South Korea's chip-heavy main index fell 3.5 percent on Oct. 22, a steeper drop than the 2.7 percent slide in Japan's Nikkei 225.
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