Seoul: South Korean stocks fell nearly 1 percent on Tuesday, ending a three-session streak of gains as investors grappled with uncertainty over the U.S. Federal Reserve's upcoming rate decision. The local currency also saw a sharp decline against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) dropped 30.5 points, or 0.95 percent, closing at 3,179.36.
According to Yonhap News Agency, trade volume was moderate, with 318.6 million shares exchanged, valued at 12.4 trillion won (US$8.89 billion). The market saw more losers than gainers, with 540 stocks declining against 321 advancing. Foreign investors sold a net 682.1 billion won, while individual investors purchased a net 846.9 billion won. Institutional investors, on the other hand, sold a net 263.8 billion won.
The market decline was attributed to profit-taking by investors following recent gains fueled by optimism over a potential U.S. Federal Reserve rate cut next month. However, there were concerns that the market sentiment had become overly optimistic. Investors found some relief in the fact that the recent summit between South Korean President Lee Jae Myung and U.S. President Donald Trump concluded without significant surprises.
Park Sang-hyun, an analyst at iM Securities, commented, "Considering the summit was aimed at defending what we already have, rather than securing something new from the United States, the meeting was successful to some extent."
Shares across various sectors fell, with major player Samsung Electronics dropping 1.68 percent to 70,300 won, and Samsung SDI losing 0.23 percent to 221,000 won. Shipbuilding stocks also took a hit due to profit-taking, with Hanwha Ocean down 6.18 percent to 107,800 won and HD Hyundai Heavy Industries decreasing 3.8 percent to 468,000 won. Financial stocks traded lower, with KB Financial losing 1.81 percent to 108,300 won and Shinhan Financial declining 2.55 percent to 65,000 won.
In a notable exception, Monami, a South Korean stationery firm, surged to the daily permissible limit, rising 29.92 percent to 2,575 won, following President Trump's compliment on President Lee's pen during their meeting. Industry sources revealed that the pen was produced by Zenyle, a local handmade pen manufacturer, using Monami's ink cartridge.
The local currency was quoted at 1,396.8 won against the U.S. dollar at 3:30 p.m., marking a decline of 11.1 won from the previous session. Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell by 1.2 basis points to 2.422 percent, while the return on the five-year government bonds decreased by 0.6 basis point to 2.596 percent.