Seoul shares fell 0.5 percent on Wednesday, after North Korea's missile launch heightened geopolitical tensions, hitting blue chips such as LG Electronics and Hyundai Group units that run inter-Korean business projects.
North Korea test-fired at least six missiles early on Wednesday, including a long-range weapon said to be capable of reaching Alaska, raising concerns about security and drawing international condemnation. See for details.
Some investors fled stocks for safer assets, boosting government bond prices, but fund managers said the fallout would be limited because South Korea's economic fundamentals remained intact, and as they foresaw no drastic US military action.
"North Korea's missile launch has undermined stocks across the board, but the impact could be short-lived. Investors will, after all, focus on second-quarter earnings and US interest rates," said Joseph Han, an analyst at Daewoo Securities.
The Korea Composite Stock Price Index (KOSPI) fell 0.47 percent to 1,279.85, after dropping as much as 2 percent at the open.
Foreign investors sold a net 20.9 billion won ($22.10 million) worth of shares by 0619 GMT, after buying a net 50.8 billion won worth in the prior session.
Past market reactions to missile threats have been muted. On August 31, 1998, when North Korea launched a Taepodong-1 missile, Seoul stocks ended up 1.76 percent, and after a down period in September, managed to rise again.
Shares in the affiliates of Hyundai Group, a conglomerate spearheading South Korea's business projects in North Korea, fell on worries economic co-operation with Pyongyang would be halted. Hyundai has invested more than $1 billion in projects ranging from a mountain resort to an industrial park in the North.
Hyundai Merchant Marine Co slumped 3.21 percent to 18,100 won, while Hyundai Securities slid 3.62 percent to 10,650 won. But Hyundai Elevator Co Ltd rose 4.07 percent to 87,000 won on market talk that Swiss lift maker Schindler Holding Ltd may add to its 25.5 percent stake in Hyundai, even after Schindler denied it.
Samsung Electronics Co Ltd, the world's largest memory chip maker, ended up 0.33 percent at 603,000 won, after opening 2.7 percent lower, while Hynix Semiconductor Inc recovered from its 2.3 percent loss at the open to close 0.49 percent down at 30,450 won. But most stocks fell across the board.
LG Electronics Inc, the world's fourth-biggest mobile phone maker, fell 3.34 percent to 55,000 won, while top lender Kookmin Bank fell 1.68 percent to 76,200 won. Decliners trumped gainers by 541 to 202 with 69 titles ending flat.
Trade volume reached 191.3 million shares worth 2.4 trillion won, data at 0621 GMT showed, compared to 190.7 million shares worth 2.5 trillion won on Tuesday. Retail investors sold a net 70.5 billion won worth of shares, although institutional investors bought a net 59.2 billion won worth. The September KOSPI 200 futures index slipped 0.25 points to 166.00, while the underlying KOSPI 200 spot index fell 0.64 points to 165.51. South Korea's junior and tech heavy Kosdaq market retreated 1.68 percent to finish at 575.98.
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