Seoul shares fell 1.4 percent on Monday, retreating from recent record highs, as a surge in the won currency to its highest in eight and a half years threatened to dent profits at exporters such as Samsung Electronics.
Hyundai Motor Co fell 3.3 percent to 85,100 won, with shares in the country's biggest auto maker rattled as its chairman, Chung Mong-koo, appeared for questioning by prosecutors over allegations the group was involved in illegal political lobbying.
Asiana Airlines Inc fell 1.91 percent to 7,700 won amid worries over record oil prices. The country's No 2 carrier said its operating profit in the first quarter fell 4.1 percent to 16.6 billion won ($17.65 million) from a year earlier, also marking a 64 percent decline from the fourth quarter.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 1.40 percent to 1,430.94, easing from a record 1,458.35 hit on Friday, the index's fourth all-time high in six sessions.
Around 290 million shares worth 4 trillion won had changed hands according to data at 0635 GMT, the lowest volume since 277.2 million shares were exchanged on March 17.
"Investors are stepping back and trying to figure out how big the impact on companies will be from the problems of a stronger won and high oil prices," said Kim Yung-min, an equity strategist at Korea Investment Trust Management.
"The market could see a correction, with a bottom of 1,350. If we want to see the rally continue, we would have to see either a change in the currency markets or a big fall in oil prices," he added.
The South Korean won rose as high as 937.0 per dollar, marking its strongest level since October 1997, after a communique from the Group of Seven nations indicated China may be singled out in their call for more flexibility in exchange rates.
Concern that regional currencies would also rise, sparked the sell-off of exporters, as a stronger won eats into returns earned abroad and make products less competitive in the key US market.
Samsung Electronics Co Ltd, the world's biggest maker of memory chips, dropped 2.46 percent to 673,000 won.
According to Daewoo Securities, every 10 won gain against the dollar wipes away 50 billion won to 100 billion won from Samsung's quarterly operating profit.
Flat panel maker LG.Philips LCD Co Ltd dropped 3.91 percent to 40,600 won, hit as well by market talk about a continued decline in panel prices, which reinforced worries about second quarter profits.
Kumho Tire, the country's second-biggest tyre maker, dropped 3.75 percent to 15,400 won after net profit fell 4.5 percent to 14.9 billion won from a year earlier, and 52.1 percent from the previous quarter.
Shares were also hit by oil worries, after US crude futures rose 2 percent to end at a record settlement price of $75.17 a barrel on Friday, fuelled by fears of a possible supply disruptions in Iran.
A dip in oil prices in Asian trade to $74.64 was not enough to quell the fears. South Korea is the world's fourth-biggest buyer of crude oil and must import almost all of its oil needs.
State-run power provider Korea Electric Power Corp fell 1.99 percent to 41,800 won.
However, shipbuilders bucked the trend after steel maker POSCO Co Ltd announced a cut in steel plate prices. Hyundai Heavy Industries Co, the world's biggest maker of vessels rose 1.82 percent to 95,000 won.
Decliners were more than double gainers by 503 to 237 with 70 titles ending flat. Foreign investors bought a net 10.5 billion won in shares on the main bourse, while retail investors bought a net 254 billion won. However, institutional investors sold a net 296 billion won.
The June KOSPI 200 futures index fell 3.60 points to 185.60, while the underlying KOSPI 200 spot index lost 2.79 points to 185.41. South Korea's junior and tech heavy Kosdaq market fell 0.83 percent to finish at 695.70.
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