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Korean stocks retreat from pre-election rally

South Korea's main stock index fell on Wednesday as a pre-election rally ran out of steam and investors try to digest the policies of new President Moon Jae-in. The Korean won fell against the US dollar. 

The benchmark Korea Composite Stock Price Index dipped 22.64 points, or 0.99 percent, to close at 2,270.12. Trade volume reached 418 million shares changing hands worth 9.2 trillion won ($8.1 billion). 


The Kospi index jumped more than 2 percent on Monday to set its highest-ever close of 2,292.76. The local stock market was closed on Tuesday due to a presidential election.

Moon, a liberal former human rights lawyer and ex-chief of staff for former president Roh Moo-hyun, is expected to seek more dialogue with North Korea and try to protect South Korea's fragile economic recovery.

Besides North Korea, however, the new administration is facing a daunting challenge on the economic front.

"The credit challenges facing the new administration include structural reforms focused on labor markets, public sector reform, and social security; corporate restructuring and chaebol reform; as well as addressing the rapid rise in household debt," said Steffen Dyck, vice president of Moody's Investors Service, in a statement.

Park Hyung-joong, head of marketing strategy division at Daishin Securities, said the local stock market appears to have been overheated, compared with recent performances at currency and bond markets.

Samsung Electronics dipped 3.02 percent to end at 2,280,000 won, and SK hynix, a global chipmaker, slipped 2.28 percent to 55,600 won.

Naver, the operator of the country's top Internet portal, shed 2.49 percent at 824,000 won.

Top carmaker Hyundai Motor fell 0.95 percent to 156,500 won, while its smaller affiliate Kia Motors rose 0.98 percent at 36,100 won.

The local currency closed at 1,135.80 won against the US dollar, down 4.4 won from the previous session's close. 

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys gained 2.6 basis points to 1.733 percent and the return on the benchmark five-year government bond added 4 basis points to 1.952 percent. (Yonhap)

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