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Seoul shares tumble 2 pct on Fed shock

South Korean stocks dropped 2 percent Thursday as investors' sentiment was dented by the U.S. Federal Reserve chief's remark on a possible reduction of its stimulus moves, analysts said. The local currency plunged against
the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) shed 37.82 points to close at 1,850.49. Trading volume was moderate at 350.6 million shares worth 4.3 trillion won (US$3.76 billion) with losers far outpacing gainers 692 to 130. It marked the lowest level since 1,848.68 tallied on Aug. 3, 2012.
"The Fed's remark came as a shock to investors as it came amid the eased market concerns over a possible reduction of stimulus measures," said Moon Hong-chul, a researcher at Tongyang Securities Co.    

Fed Chairman Ben Bernanke said Wednesday (local time) the U.S. central bank is likely to start slowing the pace of its US$85 billion monthly bond purchase program this year as its economy is improving.
Bernanke said that the Fed could end the stimulus program by mid-2014 after continuing to gradually scale back the pace of the purchase.
Market watchers, however, added the Fed's remark will only have a limited impact on the local financial market down the road, as it has curbed the market uncertainties. Investors had been divided over the U.S. policy outlook.
"The Federal Reserve eased investors' anxiety over the deadline of economic stimulus moves and the future movement of its key interest rates," said Park Jung-sup, a researcher at Daishin Securities Co.
Foreigners offloaded 125.3 billion won worth of local equities, marking the 10th straight session of a selling spree. Retail investors purchased a net 225.1 billion won, and institutions scooped up a net 237.8 billion won.
Tech shares closed lower, with market behemoth Samsung Electronics falling 2.92 percent to 1,329,000 won and top chipmaker SK hynix losing 2.66 percent to 31,050 won. Flat panel maker LG Display shed 4.21 percent to 28,450 won.
Builders traded bearish, with Hyundai Engineering & Construction falling 3.99 percent to 55,400 won and Daewoo Engineering & Construction losing 2.46 percent to 7,150 won. Daelim Industrial shed 3.67 percent to 84,000 won.
Logistics firms also lost ground, with top air carrier Korean Air losing 2.87 percent to 30,500 won, and Hyundai Merchant Marine moving down 2.74 percent to 14,200 won. CJ Korea Express shed 0.31 percent to 96,000 won.
Carmakers closed flat, with No. 1 player Hyundai Motor remaining unchanged at 207,500 won and its smaller affiliate Kia Motors standing at 58,700 won. Top auto parts maker Hyundai Mobis shed 1.51 percent to 261,500 won.
The local currency ended at 1,145.70 won against the greenback, down 14.90 won from Wednesday's close to hit an 11-month low, as investors scooped up the U.S. dollar following the Fed's remark, dealers said. The won plunged to reach 1,146.6 won against the greenback during the trading session, the lowest level tallied this year.
Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasuries gained 0.13 percentage point to 2.94 percent, and the return on the benchmark five-year government bonds moved up 0.14 percentage point to 3.16 percent.  (Yonhap News)