Seoul shares fell on Monday after Standard & Poor's mass ratings downgrade on euro zone countries over the weekend, but losses were capped as foreign and institutional investors just managed to maintain their lengthy buying streaks.
"The focal point of jitters was on the potential after-effects of the downgrade rather than the decision itself, namely the diminished potency of the European Financial Stability Facility now that there are only four AAA members to back up the fund from the previous six," said Rhoo Yong-suk, an analyst at Hyundai Securities.
"After a steady stream of programme selling early, flip-flop trading was seen late in the session with very large bids coming in, indicating conflicting reactions among institutional investors to the news in Europe," said Oh Seung-hoon, a market analyst at Daishin Securities.
The Korea Composite Stock Price Index (KOSPI) ended 0.87 percent lower to close at 1,859.27 points. The main bourse trimmed losses by nearly half after dipping more than 1.5 percent in early trade to post a session-low of 1,843.46. Pressure is mounting on the euro zone bloc to bolster its defences and put progress back on track after S&P slashed the ratings of nine out of 17 countries in the single-currency zone while Greek debt talks remain at a nervous deadlock.
Construction issues posted the heaviest falls, with Daewoo Engineering & Construction tumbling 3.98 percent while GS Construction shed 3.25 percent. Large-cap tech heavyweights also sank, as Samsung Electronics slid 1.53 percent and LG Electronics dipped 1.96 percent.
Shipbuilders, widely considered sensitive to changes in economic conditions, were among the main drags in early trade but some reversed losses following news of a large order and a sterling sales reports. Samsung Heavy Industries gained 3.53 percent after announcing it had signed a letter of agreement with Inpex to build an offshore plant in Australia in a deal worth 2.6 trillion won ($2.26 billion).
Daewoo Shipbuilding & Marine Engineering fell more than 2.5 percent in early trade but trimmed losses to 1.57 percent after it said it won a total 1.6 trillion won worth of contracts last year. Hankook Tire Co rose 2.36 percent after it announced a 20 percent rise in global sales last year. Hyundai Merchant Marine Co soared 4.35 percent on market rumours that KCC Corp was mulling using gains from its recent block sale of Hyundai Heavy Industries to buy a stake in the company.
Institutional investors bought a net 59.4 billion won ($51.7 million) worth of shares while offshore investors remained buyers for a fifth straight session, adding a net 4.9 billion won worth. The KOSPI 200 index fell 0.89 percent while the junior KOSDAQ index shed 0.63 percent.
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