Korean capital prices tumble on US, China debt issues

South Korean stock, currency and bond prices slipped to their weakest in the year Wednesday as the capital market shook in a heavy volatility over concerns of an economic slowdown in China from debt and power woes and faster-than-expected tightening in the United States.

The main Kospi is on the verge of losing 3,000 threshold with the index losing 1.22 percent to close at 3,060.27 on Wednesday, whereas the Kosdaq was off 1.09 percent to finish at 1001.46.

Retailers continued buying to protect the hard-won threshold whereas foreigners and institutions continued to sell.

The won sank on foreign selloff.

The U.S. dollar opened at 1,188.0, highest since 1,189.1 on Sept. 9. It eased to 1183.40.

Bond prices also continued to free fall as they followed U.S. debt movement. The three-year government bond yield jumped 2.6 basis points to 1.63 percent while the longer-dated bonds of 10 and 20 years traded above 2.0 percent even as the benchmark overnight rate remains at 0.75 percent.

Market uncertainty has grown sharply in the Korean financial market as spiking U.S. bond yields hurt Wall Street.

As Washington gets into another debt ceiling debate, markets have begun to price a premium on U.S. debt, sending the yield on the 10-year Treasury note to 1.56 percent. As a result, the tech-heavy Nasdaq composite to sink 2.83 percent overnight, the S&P 500 lost 2.04 percent while the Dow Jones Industrial Average retreated 1.63 percent.

Analysts find more downside than upside for emerging markets due to growing concerns over additional rate hike from inflationary pressure and uncertainties in the two biggest economies.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]