South Korean shares snap winning streak after BOK hikes rate
06:41, 26 August 2021
South Korea’s benchmark KOSPI index snapped a three-day winning streak on Thursday after the Bank of Korea (BOK) became the first major Asian central bank to hike interest rates.
BOK on Thursday lifted its key rate by 25 basis points to 0.75%, citing robust economic recovery and rising inflationary pressures, after keeping interest rate at record-low levels for 15 months to aid pandemic recovery.
The KOSPI index fell 0.5% on Thursday with technology heavyweights Samsung Electronics and Naver Corp leading losses as the nation posted its highest daily COVID-19 related death toll a day earlier.
"BOK felt that the time had come to act”
“The rise in household debt has been a source of government and BOK concern for a considerable time now, but COVID has prevented any countermeasures to offset this. Clearly, and despite the increase in daily COVID cases in Korea, which is hovering around 2000 again, the BOK felt that the time had come to act,” ING said in a note.
KRW spot price fell 0.2% against the greenback after the announcement of the rate hike on Thursday.
“We think there will be room for one hike next year,” said Freya Beamish, Chief Asia economist at Pantheon Macroeconomics.
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Aussie benchmark falls 0.5%
Elsewhere, Australia’s benchmark Standard & Poor's/Australian Securities Exchange (ASX) 200 index fell for the first time in four days after its largest city Sydney reported record-high daily new COVID-19 infections on Thursday.
ASX-listed shares of dairy producer a2 Milk fell nearly 12% after the company reported a 79% plunge in full-year profits.
Artificial intelligence data firm Appen was the top percentage loser on the benchmark on Thursday, slumping over 21% after reporting a 55% drop in first half statutory net profit after tax.
China Evergrande sours investor sentiment
Hong Kong’s Hang Seng index and China’s CSI 300 index fell over 1.5% each on Thursday hurt by losses in technology, healthcare and real estate firms.
Debt-ridden China Evergrande Group lost about 7% on Thursday after reporting it expects up to 39% drop in interim profit, souring sentiment for the Chinese real estate sector.
Smartphone manufacturer Xiaomi fell over 4% in Hong Kong on Thursday despite announcing record quarterly profit during after-market hours a day earlier.
Malaysia on a six-day winning streak
Japan’s Nikkei 225 index seesawed close to flat on Thursday as gains in logistics and financial sectors were offset by losses in pharmaceutical and retail sectors.
Malaysia’s FTSE Malaysia KLCI index was on track for its sixth straight session of gains on Thursday during Prime Minister Ismail Sabri Yaakob’s first week in office.
Meanwhile, Vietnam shares remained subdued after the government called on the army to contain an expected 50,000 new COVID-19 infections over the next few weeks in the industrial Binh Duong province.
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