SEOUL, Nov. 7 (Yonhap) — South Korean stocks took a dive of 2.3 percent on Tuesday, following the record-breaking gains of the previous session due to the reintroduction of a ban on short selling. The local currency also saw a significant decrease against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) ended at 2,433.96, a difference of 58.41 points which brought its four-day win streak to a halt. Trading volume was moderate, with 447.6 million shares worth 11.38 trillion won (US$8.6 billion) traded and losers outnumbering gainers 634 to 244.
Monday had seen the KOSPI rise 5.66 percent, the highest single-day gain ever recorded, due to the ban that will remain in effect until June 2024. Financial authorities imposed the restriction to address the increasing market volatility caused by illegal short selling practices.
“Today’s selling spree was due to investors taking profit from yesterday’s large gains,” said Kim Seok-hwan, an analyst at Mirae Asset Securities. Chung Yong-taek, an analyst at IBK Securities, commented that the market’s reaction was “irregular”, noting that in the past the KOSPI would usually increase by 6 percent within one to two weeks.
Most blue chips declined, with LG Energy Solution and Samsung SDI dropping 10.23 percent and 7.91 percent respectively. Tech companies also suffered, with SK hynix and LG Electronics closing 1.95 percent and 1.8 percent lower. Chemical and energy shares, which had enjoyed great success in the prior session, also experienced significant losses.
The local currency ended at 1,307.90 won against the U.S. dollar, down 10.60 won from the prior day’s close. Bond prices also decreased, with the yield on three-year Treasurys increasing 1.0 basis point to 3.887 percent and the return on the benchmark five-year government bonds edging up 0.7 basis point to 3.961 percent.