Seoul stocks drop 1.09 percent on concerns of inflation

Stocks dropped to their lowest point in almost seven weeks on Monday as investors dumped holdings on concerns of mounting inflationary pressure.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,890.10 points on Monday, down 31.82 points, or 1.09 percent, from the previous trading day. [YONHAP]

Stocks dropped to their lowest point in almost seven weeks on Monday as investors dumped holdings on concerns of mounting inflationary pressure. The won fell against the dollar.

The benchmark Kospi slid 31.82 points, or 1.09 percent, to close at 2,890.1 points. The reading marked the lowest closing since Nov. 30.

Trading volume was moderate at about 571 million shares worth some 9.8 trillion won ($8.2 billion), with losers outnumbering gainers 745 to 158.

Foreigners sold a net 254 billion won and institutions offloaded 259 billion won, while retail investors bought 483 billion won.

After a weak start, the key stock index fell below the 2,900-point level intraday for the first time in about six weeks and the losses extended later amid concerns over rising inflationary pressure at home and in the United States.

Last week, central banks in major countries, including the Bank of Korea and the U.S. Federal Reserve, hinted at the possibility of aggressive monetary tightening this year.

Analysts partially attributed the Kospi's loss to the upcoming mega initial public offering (IPO) of LG Energy Solution.

"Unlike their Asian peers, the local stock markets are lacking the [usual] liquidity, due to the upcoming blockbuster IPO event," Shinhan Investment analyst Choi Yoo-joon said.

"The Fed's hawkish policy issue is also having its sway on the markets," he added.

Most large caps closed lower in Seoul, led by foreign and institutional sell-offs.

Samsung Electronics added 0.26 percent to 77,500 won, but chipmaker SK hynix decreased 1.17 percent to 127,000 won.

Financial firm KB Financial Group shed 1.61 percent to 61,200 won, and steelmaker POSCO moved down 2.17 percent to 292,500 won. Celltrion plunged 6.43 percent to 160,000 won in the wake of its alleged accounting fraud case.

The local currency closed at 1,192.7 won against the dollar, up 5.4 won from the previous session's close.

The Kosdaq lost 13.49 points, or 1.39 percent, to close at 957.90.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds soared 10.2 basis points to 2.148 percent, and the return on the benchmark 10-year government bond rose 8.9 basis points to 1.79 percent.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]