South Korea shares fall on China worries, won steady as Bank of Korea holds policy

Seoul shares slipped below the key 2,000-point level on Thursday morning as China’s market turmoil continued drive nervous investors out of riskier assets.

Market reaction was largely muted after the Bank of Korea kept its policy interest rate steady at a record low of 1.50 per cent, as expected.

The Korea Composite Stock Price Index (KOSPI) was down 1.1 perc ent at 1,994.40 points after touching a morning low of 1,983.78 points, the weakest intraday level since March 16. Losing shares outnumbered winners 734 to 103.

“China risks are beginning to worry investors,” said Rhoo Yong-seok, an analyst at Hyundai Securities.

Carmaker Hyundai Motor CO Ltd fell 1.2 per cent to 127,000 won after earlier hitting 125,500, the lowest intraday level since April 22, 2010.

The South Korean won erased early losses and was last steady against the dollar at 1,136.5. The won slid as low as 1,140.0 in the morning, the weakest level since July 10, 2013.

“Markets largely expected the decision,” said Yuna Park, a foreign-exchange analyst at Dongbu Securities, referring to the BOK’s on-hold decision.

“The won has been weighed down by the China woes and Greek debt crisis, just like other emerging market currencies,” he said.

Park added that investors are also wary of intervention by foreign exchange authorities to curb the won’s weakness.

September futures on three-year treasury bonds were up 0.04 point at 109.14.