[Courtesy of Xinhua News]
South Korean shares and currency fell further on Thursday as investors feared China was planting seeds of a trade war by accelerating the depreciation of the yuan.
The KOSPI main bourse index ended down 1.1 percent at 1,904.33 points on Thursday, touching a four-month low. The South Korean won pared sharp early losses on suspected intervention and closed down 0.2 percent at 1,200.6 per dollar on Thursday. Early in the session, the won slipped as much as 0.5 percent to 1,203.7, striking its weakest level since early September last year.
Investors stayed away from emerging markets, like South Korea as a sharp fall in Chinese stock markets triggered "circuit breakers", and China's central bank set a sharply lower daily guidance rate for the yuan.
Rising tension on the Korean Peninsula in the wake of Wednesday’s North Korea’s nuclear test kept investors nervous but had no significant impact on trade on Thursday.
Trading on China's stock markets was suspended for the rest of the day, for the second time this week, on Thursday as a new circuit-breaking mechanism was tripped less than half an hour after the open. Shanghai stocks slid 7 percent to trigger the halt in trading
The People's Bank of China (PBOC) again surprised markets by setting the official midpoint rate on the yuan, at 6.5646 per dollar, the lowest since March 2011.
A sustained depreciation of the yuan pressured other currencies to devalue their curies to stay competitive with China, the region’s biggest export machine.
China's stock market crash prompted its securities regulator to unveil new rules to restrict selling by big shareholders who have been locked into their holdings for six months since Beijing banned them from offloading stocks to arrest a summer market crash.
Under the new rules taking effect on Jan 9, big shareholders are not allowed to sell more than 1 percent of a listed company's share capital every three months.
By Alex Lee
reporter
Park Sae-jin
swatchsjp@ajunews.com
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