Seoul shares drop, banks up on 2004 outlook

South Korean shares ended lower on Friday, as investors digested gains after the market rose to near 22-month highs this week, but Woori Financial Group and other banking shares firmed on a brighter outlook for 2004.
News from a banking source that Citigroup had been named as the preferred bidder for a controlling stake worth $1 billion in market value in Koram Bank failed to have a lasting impact on the bank's shares.
Koram Bank ended flat at 15,800 won after rising 3.2 percent to 16,300 won at one point in the afternoon session.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.47 percent to close at 877.49 points.
The index shed 0.5 percent this week. Technology and other export-led stocks, many of which climbed to near all-time highs in recent weeks on the back of red-hot shipments, suffered from a strengthening won currency, analysts said.
"Now foreign investors are chasing banking shares in the belief that credit card delinquencies and provisioning burdens will ease."
Woori Financial, the country's third-biggest financial services firm, jumped 4.25 percent to a record closing high of 8,100 won. Its bigger rival, Kookmin Bank, added 1.01 percent to 49,800.
The prospective sale of the Carlyle Group's 36.6 percent stake in Koram Bank to Citigroup was expected to give South Korea's seventh-ranked lender more firepower to compete with Kookmin and Woori, analysts said.
Outperforming the market, the country's biggest oil refiner, SK Corp, leapt 6.40 percent to 40,750 won on expectations of improved profit margins in petrochemical products.
With the won stepping back against the dollar, export-led LG Electronics Inc advanced 1.26 percent to 64,200 after it announced healthy January sales.
The local currency settled at 1,167.3 per dollar, down from 1,164.1 at Thursday's close, giving a boost to exporters whose products are more competitive abroad with a cheaper won.
Trade volume on the main board was 475 million shares against 735 million shares the day before. Turnover decreased to 2.2 trillion won from three trillion won.
Foreign investors bought a net 137.1 billion won of local shares and retail investors a net 12.1 billion won.
Local institutions sold a net 147.3 billion won in local shares. The junior Kosdaq dropped 0.53 percent to 443.31.