South Korean shares fell on Monday, hurt by a second session of heavy foreign selling as uncertainty over a proposed bailout for Cyprus reignited worries about the euro zone debt crisis. The Korea Composite Stock Price Index (KOSPI) closed down 0.9 percent at 1,968.18 points, a one-month low.
"Between the bad external climate and the lack of domestic policy direction, it's no suprise that foreigners are offloading Korean stocks," said Kim Yong-koo, an analyst at Samsung Securities. "We need to brace for the index to fall to the 1,950-mark." Cyprus will hold a parliamentary vote on Monday on a plan that would make bank depositors foot part of the bill for a European rescue for the first time. The proposal sparked a run on cash points over the weekend.
Samsung Electronics closed 2.4 percent lower after shedding as much as 3 percent during the early trade. This follows Friday's 2.6 percent fall on foreign selling triggered by a rebalancing of FTSE's Emerging Transition Index. Market watchers said the share fall could also be attributed on some disappointment with Samsung's newest Galaxy S4 phone.
Local rival LG Electronics rose 1.5 percent. The stock received a boost on reports that another rival, Panasonic Corp, may withdraw from plasma television operations. Overall, 566 stocks declined while 260 advanced. Among daily movers, Doosan Engineering & Construction rose 4.8 percent. Market watchers said this was due to optimism about its improving finances ahead of the next tranche of share issues, which together aim to raise 1 trillion won ($900.54 million) for the cash-strapped builder.
Foreign investors sold a net sold 365 billion won worth local shares, weighing on the main board. This follows a 589 billion sell-off on Friday, the steepest since September 2011. The KOSPI 200 benchmark of core stocks closed down 1 percent, while the junior KOSDAQ edged 2.5 percent lower.
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