SEOUL, May 28 (AJP) -Foreign and institutional investors rattled by escalating U.S.-Iran tensions and the Bank of Korea’s strongest-yet signal of aggressive tightening hammered South Korean equities Thursday, threatening to drag the KOSPI back below the 8,000 mark first breached earlier this week.
The benchmark index plunged as low as 7,841 before paring losses to close at 8,114.01, as retail investors rushed in late to scoop up semiconductor heavyweights dumped by institutions.
Samsung Electronics fell around 3 percent after sliding as much as 5 percent intraday, while SK hynix erased steep early losses to rebound into positive territory. The chipmaker, which tumbled to as low as 2,151,000 won, recovered to 2,260,000 won by late trading, up 0.76 percent on aggressive retail buying.
The selloff accelerated after new Bank of Korea Governor Shin Hyun-song, presiding over his first rate-setting meeting, delivered the clearest warning yet that borrowing costs may rise sharply in the months ahead.
“All the signs — price pressure, the growth trajectory, the exchange rate and the real estate market — point in one clear direction,” Shin said, describing the rate outlook as “exceptionally clear.”
Shin framed the policy debate around three questions — “when,” “how fast” and “how far” rates may rise — while the central bank’s latest dot plot suggested the benchmark rate could climb as high as 3.25 percent within the year.
The remarks sent fresh shockwaves through a retail-driven market rally increasingly fueled by leveraged bets, raising fears that higher borrowing costs could quickly unwind the stock frenzy that has propelled the KOSPI to record territory.
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