Kospi Drops 1.7% Early as US-Iran Talks Collapse; Won Opens 12.9 Lower

Source

Korea Economic Daily

Summary

The Kospi fell nearly 2%% in early trading as the collapse of US-Iran talks to end the war and the Strait of Hormuz conflict weighed on investor sentiment.
Global oil prices surged, with WTI up 8.94%% and Brent crude up 7%%, while institutions were net sellers of 217.6 billion won and retail and foreign investors were net buyers.
The Kospi and the Kosdaq index both fell, while the won-dollar exchange rate opened 12.9 won higher at 1,495.4 won per dollar, adding to pressure on risk assets.

Forecast Trend Report by Period

Oil Prices Surge

*Photo: somkanae sawatdinak/Shutterstock*

South Korea’s Kospi fell nearly 2% in early trading on April 13 after the collapse of US-Iran talks to end the war dented investor sentiment.

As of 9:03 a.m., the benchmark Kospi had dropped 101.55 points, or 1.73%, to 5,757.32.

The decline followed a flare-up in tensions over control of the Strait of Hormuz after the breakdown in negotiations between the US and Iran.

US Central Command, or CENTCOM, announced that it would impose a blockade on all maritime traffic entering and leaving Iranian ports starting at 10 a.m. Eastern Time on April 13 under a presidential proclamation.

The blockade will apply without discrimination to vessels of all nations entering and leaving all Iranian ports in the Arabian Gulf and the Gulf of Oman, CENTCOM said. It added that freedom of navigation through the Strait of Hormuz for ships traveling to and from non-Iranian ports would not be impeded.

Oil prices surged. According to CME Group, West Texas Intermediate crude for May delivery on the New York Mercantile Exchange rose 8.94% from the previous settlement to $105.20 a barrel. Front-month Brent crude climbed 7% to $102.29 a barrel.

In the Kospi market, institutional investors were net sellers of 217.6 billion won. Retail investors and foreign investors were net buyers of 205.3 billion won and 16.3 billion won, respectively.

Most of the market’s biggest companies traded lower. Samsung Electronics and SK Hynix fell 3.25% and 2.04%, respectively, to 199,300 won and 1,006,000 won.

Samsung Electronics preferred shares, Hyundai Motor, SK Square, Samsung Biologics, Doosan Enerbility, KB Financial Group, Kia and HD Hyundai Heavy Industries were also down between 1% and 3%.

LS ELECTRIC surged more than 12% in early trading on its first session after a stock split.

The Kosdaq index also fell more than 1%. As of that time, it was down 1.54% at 1,076.82.

The won-dollar exchange rate opened more than 10 won higher. In Seoul trading, the won opened at 1,495.4 per dollar, up 12.9 won from the previous session.

Noh Jung-dong, Hankyung.com reporter, dong2@hankyung.com