Seoul shares drop

Seoul shares fell 1.3 percent on Wednesday, suffering its first loss in five sessions to end below the 1,800-point level, as brokerages fell on worries that take-overs in the sector will fetch less than expected.
The concerns came a day after a senior regulatory official said the government was willing to resume granting new brokerage licences, a move analysts have said was spurred by concerns that take-over premiums in the securities sector had risen too much.
Securities firms such as Daewoo Securities Co also suffered due to worries the government would tighten regulations on long-term margin trading, or trading on credit, reducing a significant revenue source for the sector.
Brokers lost ground on a day combined trading values in the main KOSPI and junior Kosdaq reached 12.4 trillion won ($13.39 billion), according to Korea Exchange data at 0622 GMT, compared with the daily average of 5.1 trillion won in 2006.
But lenders surged, with Kookmin Bank hitting a record, on expectations banks will expand into the brokerage sector without paying the sky-high premiums some had feared. "If the government allows banks to set up their own brokerages, then it's going to weaken the premium in the sector," said Sean Chang, an analyst at Samsung Securities.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 1.33 percent to end at 1,783.79 points, backing away from a record 1,813.84 hit in the previous session and falling below the 1,800-point level it had broken for the first time on Monday.
The junior Kosdaq market dropped 2.77 percent to 797.27 points, marking its biggest one-day percentage fall since dropping 8.2 percent on October 9, 2006, when North Korea tested a nuclear device.
Retail investors have traditionally dominated the Kosdaq, and changes to margin trading would likely curtail trading volumes. Daewoo Securities, the country's most valuable brokerage, sank 9.84 percent to 30,700 won, after having surged 82 percent this year as of Tuesday's close.
Brokerage shares had risen recently amid soaring trading volumes and as parliament is set to approve legislation that would ease regulations in the sector and encourage securities firms to bulk up through consolidation. Smaller brokerages also slumped, with SK Securities Co falling by the daily limit of 15 percent to 2,390 won.
But Kookmin Bank hit a record before ending up 3.85 percent at 89,000 won after Maeil Business Newspaper reported the country's top lender planned to buy an unlisted domestic brokerage, citing unidentified sources.
Industrial Bank of Korea gained 9.19 percent to 20,800 won after Maeil also reported the state-run lender may take steps to set up its own brokerage, following regulators' proposed moves to allow new brokerage licences. Among other movers, SK Telecom Co rose 0.24 percent to 211,500 won. Advanced Digital jumped 14.8 percent to 19,400 won.