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| Electronic boards at KEB Hana Bank headquarters in Seoul show a drop in the benchmark KOSPI, Wednesday, when geopolitical risk heightened in the wake of Iran's missile retaliation against U.S. troops. Against the same backdrop, the won-dollar exchange rate rose. Yonhap |
By Lee Min-hyung
The local stock market plunged Wednesday amid heightened uncertainty after Iran launched more than a dozen missiles targeting U.S.-Iraqi air bases.
The benchmark KOSPI closed at 2,151.31 points, down 1.11 percent from the previous trading day, as the escalating military conflict between the two countries aroused concerns that the geopolitical risk will weigh on the local market.
The KOSPI tumbled most in the morning, with the main bourse at one time falling below the 2,140-mark.
Government authorities are also watching how the tension will affect the economy.
At an emergency meeting on Wednesday, the Bank of Korea (BOK) said it would tighten currency monitoring by teaming up with its overseas offices.
"A widespread view is the tension between the U.S. and Iran will not escalate into a full-scale armed conflict," BOK Deputy Governor Yoon Myun-shik said after hosting the meeting with officials.
"But we are watching the possible fluctuation in the local financial and currency market, as the issue is frequently making headlines here."
The BOK said it would share details of the situation with relevant government authorities. If necessary, it would move to stabilize the market, Yoon said.
The escalating tension also raised the won-dollar exchange rate in line with investors' preference for safe assets in times of uncertainty. It fell 0.39 percent to 1,170 won per dollar on Wednesday.
The gold price also rose amid the intensifying risk abroad. Gold traded at 60,032.93 won per gram here, up 1,395.58 won, or 2.38 percent, from a day ago.
Local defense stocks fluctuated in the aftermath of the conflict.
Hanwha Systems, the defense systems manufacturing affiliate of Hanwha Group, closed at 10,850 won on the Seoul bourse Wednesday, up 700 won, or 6.9 percent, from the previous day.
Other defense shares also reported turbulence in their valuations.
LIG Nex1, a Seoul-based aerospace and defense equipment maker, topped 35,000 won during the morning, but closed at 32,400 won, down 1.37 percent from a day earlier.
