Seoul shares slip

Seoul shares ended lower on Tuesday with Hyundai E&C weighing, but Hana Financial rose on news the group had signed a preliminary deal to buy a controlling stake in Korea Exchange Bank. The Korea Composite Stock Price Index finished down 0.77 percent at 1,899.13 points.
The market's reaction to the Bank of Korea's decision to lift its policy interest rate by a quarter point was muted as the decision was expected, according to analysts. "Investors sentiment remains fragile as the US market did not do well and amid existing concerns about monetary tightening by China," said Lee Kyoung-su, a market analyst at Taurus Investment & Securities. Hana Financial Group Inc rose 2.7 percent after news it had signed a non-binding preliminary agreement with private equity firm Lone Star to buy a controlling stake for about $4.1 billion in Korea Exchange Bank.
"Hana is the smallest of the top banking groups with probably the weakest client base. If Hana takes KEB, that is good news in that it will be able to expand market share in this fiercely competitive industry," said Ku Yong-uk, an analyst at Daewoo Securities. "Whether Hana has the financial prowess to close the deal is another question. Pricing is the key."
KEB ended down 3.1 percent. Woori Finance Holdings Co Ltd retreated 3.6 percent after news Hana Financial had signed the deal to buy the 51 percent stake in Korea Exchange Bank. "If Hana Financial takes KEB, Woori is sort of left in the cold. It will become a laggard in this huge M&A game going on in the banking industry," said Sohn Joon-beom, an analyst at LIG Investment & Securities.
Hyundai Engineering & Construction Co Ltd fell 14.9 percent after news a consortium led by Hyundai Group had been named preferred bidder for a $2.5 billion-plus stake in South Korea's biggest builder. "There are concerns that Hyundai Group may not have the financial capability to fund completion of the acquisition and may face a situation of having to sell assets of Hyundai E&C, which will hurt Hyundai E&C's balance sheet", said Park Young-do, an analyst LIG Investment &Securities.
Hyundai Merchant Marine Co Ltd also tumbled 15 percent. "The market had speculated that Hyundai Motor Co would be picked as preferred bidder, in which case a battle for the stake in Hyundai Merchant could have sparked," said Hyun Min-kyo, an analyst at Shinhan Investment Corp.
Hyundai Engineering & Construction controls 8.3 percent of Hyundai Merchant Marine, one of the key units of Hyundai Group. Hyundai Heavy Industries Co Ltd, in which the brother of Hyundai Motor Group's chairman controls a major stake, owns 17.6 percent.
Shipbuilders lost ground on losses in the Baltic Dry Index, which tracks the cost of shipping key commodities. STX Offshore & Shipbuilding fell 7.6 percent and Daewoo Shipbuilding & Marine Engineering declined 2.5 percent. Foreign investors were buyers of a net 77 billion won ($6.79 million) worth of stocks, net buyers for a third session.
Trading volume was 326.7 million shares worth 6.9 trillion won, compared with average daily trading volume and turnover of 370 million shares worth 6.5 trillion won in October. The KOSPI 200 December futures index fell 1.85 points to 247.65. The KOSPI 200 spot index shed 1.38 points to 247.84. The junior Kosdaq market retreated 0.35 percent to 503.04.