Seoul shares had their biggest fall in three weeks on Monday, after a batch of firms, including Hyundai Motor, posted earnings that came below forecasts, while exporters were further hit by weak US economic growth data.
Kookmin Bank erased earlier gains to end flat at 77,900 won ahead of its quarterly results. The country's biggest bank said after the market's close third-quarter net profit dropped a worse-than-expected 28 percent from 2005. Only 155.3 million shares changed hands according to data at 0635 GMT, making it the lowest traded session sine July 26.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.95 percent to end at 1,356.11 points, marking its biggest one-day percentage fall since October 9, the day that North Korea announced it had tested a nuclear device.
"The GDP data for the US was much weaker than expected, and that has raised some worries about a hard landing in the US economy," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management. Data on Friday showed US economic growth in the third quarter slowed to its weakest pace in more than three years.
The data has clouded the outlook for South Korean exporters, which count the United States as their second-biggest market, at a time when investors are already concerned about the impact on profits from a stronger won currency. The won on Monday hit a new one-month high, threatening to dent profits earned abroad at exporters and make goods less competitive overseas.
"The foreign exchange factor is a concern. As the won strengthens, it could affect a turnaround in the auto and IT sectors," said Jason Hwang, a strategist at Woori Investment and Securities. Samsung Electronics Co Ltd, the world's biggest maker of memory chips, fell 1.77 percent to 609,000 won, hit as well after Goldman Sachs said on Friday shipments of the main circuit boards for personal computers will be weaker than expected this year.
The forecast worsened worries in a sector that may be facing a chip supply glut in the first half of 2007. Hynix Semiconductor Inc dropped 3.06 percent to 33,300 won. Shares in the worlds second-biggest chip maker have lost 6.3 percent since it posted mixed earnings on Thursday. Hyundai Motor Co fell 1.45 percent to 75,000 won after reporting third-quarter net profit almost halved due to labour disputes and a firmer won currency.
Affiliate Kia Motors Corp rose 0.35 percent to 14,150 won despite reporting an unexpected quarterly net loss after dropping 8.1 percent in October as of Friday's close. Traders said the shares had been oversold and investors were speculating on a fourth quarter earnings recovery. Other companies also disappointed investors. Hyundai Engineering and Construction Co Ltd dropped 1.85 percent to 53,000 won following its weaker-than-expected earnings.
Kumho Tire Co Inc dropped 6.28 percent to 11,200 won, its biggest one-day percentage fall since July 28, after South Korea's second-biggest tyre company said it had swung to a net loss in the third quarter from a year earlier.
However, analysts generally expected to see a recovery by the end of the year. "Earnings today were not good, but we believe earnings marked the bottom in the third quarter. Every sector will see a rebound in the next quarter," said Cho Seong-joon, an analyst at Meritz Securities.
Decliners trumped gainers by 498 to 233 with 90 titles ending flat. Foreign investors sold a net 117.4 billion won in shares on the main bourse, while retail investors sold a net 10 billion won. Institutional investors bought a net 104.2 billion won. The December KOSPI 200 futures index fell 2.25 points to 177.00, while the underlying KOSPI 200 spot index lost 1.86 points to 175.99. South Korea's junior and tech heavy Kosdaq market lost 1.02 percent to finish at 580.10.
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