(2nd LD) Seoul shares sink nearly 6 pct on tech rout, rising yields

On August 19, Seoul shares experienced a sharp decline of nearly 6 percent, primarily driven by losses in the technology sector, as rising oil prices and increasing global bond yields dampened investor confidence. The decline was significant enough that program trading in KOSPI-listed shares was temporarily halted for five minutes, a measure activated when the KOSPI 200 futures index fell by 5 percent or more within a single minute.

Shortly after the market opened, the benchmark Korea Composite Stock Price Index (KOSPI) dropped 398.66 points, or 5.8 percent, to close at 6,471.17, having dipped to an intra-day low of 6,400.81.

The negative sentiment was exacerbated by the performance of Wall Street's major indexes, which had closed lower earlier in the day. This was due to ongoing peace negotiations between the United States and Iran, which raised concerns among investors, and the upward trend in oil prices as a result of the stalemate. The U.S. 30-year Treasury yield reached its highest level since 2007, reflecting the market's apprehension about potential high inflation rates fueled by surging energy costs.

Trading activity on the day was moderate, with a turnover of 302.07 million shares valued at 22.94 trillion won (approximately US$16.4 billion). The majority of trades were sell-offs, with the number of decliners far outnumbering advancers at 700 to 171. Foreign investors and institutions sold a combined net of 348.8 billion won and 132.4 billion won, respectively, while domestic individual investors bought a net of 463.6 billion won.

Foreign investors and institutions were particularly active in offloading local semiconductor shares, such as Samsung Electronics and SK hynix, as concerns over their future prospects grew with the rise in bond yields. Lee Kyoung-min, an analyst at Daishin Securities, noted that such selling activity was prevalent. Market leaders in the technology sector, including Samsung Electronics and SK hynix, saw their shares plummet.

Samsung Electronics' stock fell by 7.82 percent to 247,500 won, while its chipmaking rival SK hynix dropped by 9.75 percent to 1.5 million won. SK Square, the parent company of SK hynix, saw a 11.54 percent decline to 1 million won, and Samsung Electro-Mechanics, an electronics component subsidiary of Samsung Electronics, experienced a 3.68 percent decrease to 1.38 million won.

Despite the broader market downturn, the Korean won strengthened against the U.S. dollar, closing at 1,397.7 won per dollar, up 14.1 won from the previous day's closing. Bond prices, which typically move inversely to interest rates, also rose. The yield on three-year Treasurys decreased by 4.9 basis points to 3.798 percent, and the return on the benchmark five-year government bonds fell by 4.2 basis points to 4.068 percent.