South Korean financial markets experienced a volatile trading session on Tuesday as early substantial gains were significantly trimmed by closing, with investor concerns over the weakening Korean won overshadowing positive global cues from US technology stocks.
Market Performance and Key Metrics
The benchmark KOSPI index managed to close in positive territory, but only marginally so, finishing up 11.72 points or 0.30% at 3,857.78. This represented a significant pullback from the session's peak, where the index had surged as much as 2.61% earlier in the day.
Market breadth reflected the cautious sentiment, with 328 advancing issues compared to 554 declining stocks out of the total 932 traded securities. Foreign investors emerged as net buyers, purchasing shares worth 116.0 billion won, providing some support to the market.
Currency Concerns Overshadow Global Gains
The trading session began on a strong note, with South Korean shares opening higher as chipmakers followed overnight gains in US technology markets. Wall Street had closed higher on Monday, with the Nasdaq Composite rising more than 2%, boosted by increasing expectations that the US Federal Reserve might lower interest rates in December.
However, these positive global influences were quickly tempered by persistent worries about the weak Korean currency. The won was quoted at 1,472.4 per dollar on the onshore settlement platform, representing a 0.28% strengthening from its previous close at 1,476.5, but concerns about overall currency weakness continued to weigh on market sentiment.
"Investor sentiment is subdued due to foreign exchange rates, because strong foreign inflows are unlikely unless the weakness in the currency is resolved," explained Park Kwang-nam, analyst at Mirae Asset Securities.
Sector Performance and Economic Outlook
Among index heavyweights, performance was mixed. Chipmaker Samsung Electronics rose 2.69%, while peer SK Hynix lost 0.19%. Battery maker LG Energy Solution climbed 0.36%, showing modest gains.
Automobile stocks showed little movement, with Hyundai Motor and Kia Corp remaining largely unchanged. However, steelmaker POSCO Holdings shed 0.50%, while drugmaker Samsung BioLogics fell significantly by 9.06%, contributing to the market's downward pressure.
In debt markets, December futures on three-year treasury bonds gained 0.02 point to 105.83. The most liquid three-year Korean treasury bond yield fell by 0.7 basis point to 2.901%, while the benchmark 10-year yield declined by 1.5 basis points to 3.268%.
Market attention now turns to the Bank of Korea's upcoming policy decision on Thursday, where the central bank is widely expected to keep its key interest rate unchanged as policymakers navigate challenges posed by currency volatility and an overheated housing market.
