Seoul shares ended flat on Thursday, amid caution ahead of the simultaneous expiry of options and futures, and as blue chips such as Samsung Electronics fell after the central bank unexpectedly raised interest rates.
But stock analysts largely downplayed the long-term impact of the rate increase, noting that investors had already discounted a rise and that the decision reflected confidence in a recovery in Asia's fourth-largest economy.
Broader losses were capped as investors continued to snap up brokerages such as Woori Investment and Securities Co and other stocks seen to have good earnings potential, including state-run power provider Korea Electric Power Corp.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.04 percent to end at 1,324.20, retreating from a record high 1,328.95 on Wednesday.
South Korea's central bank raised interest rates for the second time in three months to pre-empt a possible rise in inflation as a recovery in the economy gained strength. However, analysts did not expect a significant downturn of a record-setting index that has been the best performer among major markets in Asia in 2005, after gaining almost 48 percent so far.
Foreign investors sold a net of 143.1 billion won in shares on the main bourse, although this was offset by strong buying by institutional investors and retail investors, who bought a net of 314 billion won and 128.7 billion won, respectively.
Blue chips led decliners, with recent outperformers hit most, as investors opted to lock in gains.
Samsung Electronics Co Ltd, the world's biggest memory chip maker, fell 1.25 percent to 633,000 won, retreating from a record 645,000 won hit on Wednesday.
Hyundai Motor Co, the country's biggest auto maker, fell 2.04 percent to 96,000 won. The stock hit an all-time high of 98,600 won in the prior session.
Meanwhile, Kookmin bank, the country's biggest lender fell 0.27 percent to 73,300 won after hitting a record 75,300 won on Wednesday.
Shares in SK Corp, South Korea's biggest oil refiner rose 0.95 percent to 53,000 won.
Trade volume reached some 510 million shares worth 5.1 trillion won compared to 542.8 million shares worth 5.8 trillion won on Wednesday. Decliners edged out gainers by 435 to 318 with 64 titles ending flat. The December KOSPI 200 futures index fell 0.70 point to 169.45 before expiring. The underlying KOSPI 200 spot index edged down 0.08 point to 170.13.
South Korea's junior and tech heavy Kosdaq market fell for a second session in a row, retreating from three and a half year closing highs earlier this week. The index ended down 0.49 percent to finish at 725.85.