Stocks plummet as Kim Jong-un calls for war

Shares dropped following Kim Jong-un's hostile remarks and ongoing military tensions in the Red Sea. The local currency fell sharply in value.

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,497.59 points on Tuesday, down 1.12 percent, or 28.40 points, from the previous trading session. [NEWS1]

Shares slid more than 1 percent Tuesday as escalating geopolitical tensions surrounding the Korean Peninsula weakened investors' appetite for risky assets. The local currency sharply fell in value against the dollar.

The Kospi lost 28.4 points, or 1.12 percent, to 2,497.59.

Trading volume was slightly heavy at 641.9 million shares worth 8.5 trillion won ($6.4 billion), with losers outpacing winners 647 to 230.

Institutions and foreigners led the sharp decline, selling a combined 587.4 billion won worth of local shares and offsetting a net 585.9 billion-won purchase by individuals.

“Foreign investors turned to sell-off mode after North Korean leader Kim Jong-un made hostile remarks the previous day, increasing geopolitical risks in the region,” said Noh Dong-gil, an analyst at Shinhan Securities.

He also noted that ongoing military tension in the Red Sea sapped risk appetite.

In a speech delivered at a key parliamentary meeting Monday, the North's leader called for revising the country's constitution to define South Korea as the “No. 1 hostile country” and to codify the nation's commitment to “completely occupying” South Korean territory in the event of a war, according to the North's state media.

In Seoul, most big-cap shares went south.

Samsung Electronics fell 1.76 percent to 72,600 won, and SK hynix declined 1.49 percent to 132,100 won.

Hyundai Motor dropped 0.69 percent to 186,200 won.

Posco Holdings shed 1.02 percent to 437,500 won and LG Chem dropped 1.48 percent to 437,500 won.

Battery, bio and IT shares ended mixed.

LG Energy Solution gained 0.25 percent to 400,500 won, but Samsung SDI and Posco Future M lost 1.25 percent and 0.82 percent to 395,000 won and 303,500 won, respectively.

Samsung Biologics added 0.26 percent to 766,000 won, but Celltrion dropped 0.32 percent to 187,500 won.

Naver went up 0.22 percent to 230,000 won, but Kakao fell 2.45 percent to 59,600 won.

The won ended at 1,331.80 won against the dollar, up 11.6 won from the previous session's close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds rose 4.6 points to 3.234 percent. The return on the benchmark U.S. 10-year government bonds remained unchanged, as U.S. markets were closed for Martin Luther King Jr. Day.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang.co.kr]