The Kospi swung between gains and losses Friday morning as expectations for Samsung Electronics' shareholder return program worth around 150 trillion won ($108 billion) collided with pressure from surging US Treasury yields. The index shed more than 1 percent at the open but quickly pared losses and briefly turned positive, keeping investors on edge in a tight range.
According to Korea Exchange, the Kospi opened down 92.63 points, or 1.35 percent, at 6,759.95 before turning mixed. As of 10 a.m., it was trading at 6,839.54, down 0.19 percent. On the main Kospi market, retail investors and institutions were net sellers of 135.9 billion won and 144.7 billion won, respectively, while foreigners were net buyers of 105.5 billion won.
Among large-cap stocks, Samsung Electronics rose 0.55 percent and SK Hynix gained 3.49 percent, while SK Square, Samsung Electro-Mechanics and Hyundai Motor were all in the red.
The mixed performance came despite Samsung Electronics' large-scale shareholder return plan, as rising US Treasury yields and concerns over slowing consumer spending weighed on investor sentiment.
Samsung Electronics is expected to unveil a shareholder return program worth around 150 trillion won this month, encompassing share buybacks and special dividends. The plan would be the largest ever by a Korean-listed company. The final figure is expected to be set in line with the company's policy of returning 50 percent of free cash flow to shareholders, backed by improved cash generation as the memory chip market recovers.
Headwinds from Wall Street were strong, however. Overnight, the Dow Jones Industrial Average fell 1.32 percent, while the S&P 500 and NASDAQ Composite dropped 0.87 percent and 1.00 percent, respectively.
The declines reflected a combination of renewed upward pressure on US Treasury yields and concerns about slowing US consumption following Walmart's earnings. The US Treasury briefly calmed markets by announcing plans to expand long-term bond buybacks, but yields reversed higher the following day, acting as a drag on equities.
Markets are worried that long-term US Treasury yields hovering near 5 percent could drain liquidity from equities. Investors were also disappointed after Walmart, the largest US retailer, reported second-quarter sales growth of just 2.6 percent — its weakest in six years — stoking fears of weakening consumer sentiment in the United States.
The yield on the 30-year US Treasury rose about 4 basis points from the previous session to 5.24 percent, while the benchmark 10-year yield climbed 5 basis points to 4.70 percent.
Persistently rising crude oil prices are adding to inflation concerns. President Donald Trump on Thursday warned of an unprecedented "economic isolation campaign" against Iran, signaling sweeping new sanctions. In response, Brent crude for October delivery and West Texas Intermediate for September delivery settled up 2.36 percent and 2.33 percent, respectively, at $93.78 and $87.83 per barrel.
The Kosdaq also fell. The index opened down 16.84 points, or 2.00 percent, at 824.05 and extended its losses through the morning session. On the Kosdaq market, retail investors were net buyers of 114.7 billion won, while foreigners and institutions were net sellers of 63 billion won and 49.9 billion won, respectively.
th5@heraldcorp.com
