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Seoul stocks down for 6th day on rate hike woes; Korean won further losing ground

An electronic board showing the Korea Composite Stock Price Index (Kospi) at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)
An electronic board showing the Korea Composite Stock Price Index (Kospi) at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)

South Korean stocks fell to a fresh 19-month low Tuesday to extend their losing streak to a sixth day as investors were wary of a larger-than-expected interest rate hike in the US and a global economic recession. The local currency continued to slide against the US dollar.

The Korea Composite Stock Price Index (KOSPI) lost 11.54 points, or 0.46 percent, to close at 2,492.97 after falling to as low as 2,457.39 at one point.

Trading volume was moderate at 661.21 million shares worth 9.80 trillion won ($7.62 billion), with decliners far outpacing gainers 706 to 176.

Foreign investors sold a net 276.12 billion won worth of shares, while institutions and retail investors bought a net 184.65 billion won and 38.68 billion won worth of shares, respectively.

The market opened lower, tracking a sharp plunge on Wall Street, and had fallen by more than 1 percent during the session. But some of the losses were pared on bargain hunting before the market closed.

Eyes are on the Federal Reserve's two-day interest rate-setting meeting from Tuesday (US time), as some forecast that the central bank would raise the key rate by 75 basis points to tame the surging inflation.

If the Fed does that, it would be the first time since 1994 that it raised the rate by three-quarters of a point at one time.

"High inflation and a possible 'giant step' by the Fed have sparked fears of a global recession," Cape Investment & Securities analyst Na Jeong-hwan said.

"But lowered corporate valuations appear to have limited a further drop, though volatility over global uncertainties and the strong dollar is expected to continue for the time being," he added.

As market rout deepened, the government and the Bank of Korea said they will "actively" step in, if needed, to stabilize the market.

"The government needs to take actions to prevent market jitters from sharply rising due to excessive herd behavior in the FX market and review contingency plans that can be mobilized at any time," Finance Minister Choo Kyung-ho said at a meeting with senior ministry officials.

In Seoul, top-cap tech and chemical shares traded mixed, while bio and carmakers fell to drag down the index.

Market bellwether Samsung Electronics lost 0.32 percent to a fresh 52-month low of 61,900 won, while No. 2 chipmaker SK hynix inched up 0.1 percent to 99,100 won.

Major battery maker LG Energy Solution jumped 2.77 percent to 426,500 won after the company announced the plan to build a new plant in South Korea for the 4680 battery cells known for their wide use by Tesla Inc.

Chemical giant LG Chem rose 0.36 percent to 564,000 won, while Samsung SDI sank 3.28 percent to 531,000 won. No. 1 steelmaker POSCO retreated 1.68 percent to 263,500 won.

Hyundai Motor tumbled 2.0 percent to 171,500 won, and its smaller affiliate Kia went down 1.52 percent to 78,000 won.

The local currency ended at 1,286.4 won against the US dollar, down 2.4 won from the previous session's close. (Yonhap)

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