Seoul shares ended flat on Friday, scraping a fresh 5-1/2 month closing high, as Shinhan Financial rose a day after posting a jump in profits, but as a stronger won and hefty foreign selling continued to take their toll.
Kookmin Bank fell 1.48 percent to 73,400 won amid worries its planned purchase of smaller rival Korea Exchange Bank from US buyout fund Lone Star would be delayed further by continuing prosecutor probes. A South Korean district court on Friday turned down prosecutors' requests to detain senior officials at Lone Star for questioning over alleged stock trading violations, although prosecutors swiftly challenged the ruling.
The benchmark Korea Composite Stock Price Index (KOSPI) ended up 0.01 percent at 1,383.88 points, just enough to notch its highest close since May 17 and a fourth consecutive day of gains.
Shares rose 1.08 percent for the week, marking a third consecutive weekly gain, and erasing their loss for the year. But analysts are cautious on whether the KOSPI can maintain its winning run amid uncertainties about the economy and some disappointment over recent earnings.
"The auto and tech sectors have disappointed investors, and there's little hope they will perform better," said Han Yo-seop, an analyst at Daewoo Securities.
"A strong won will continue to hit profits at Hyundai Motor and Kia Motors. Technology shares don't look attractive either when the global economy is bracing for slower growth."
Despite the gains in the KOSPI, foreign investors have remained staunch sellers, unloading a net 222.1 billion won ($236.8 million) on Friday, which brought their total for the year to $11.51 billion.
Foreigners have now sold more than they bought in 15 of the past 17 sessions. Shinhan Financial Group rose 1.85 percent to 43,950 won, among the few gainers on Friday in a sluggish banking sector that has reported a mixed set of quarterly results.
Shinhan posted a forecast-beating 25 percent rise in quarterly profit after the market close on Thursday, in stark contrast to bigger rival Kookmin Bank, which missed forecasts with a 28 percent slump in quarterly profit.
Firms benefiting from a stronger South Korean won also gained. POSCO Co Ltd rose 1.89 percent to 270,000 won amid expectations for lower import costs for raw materials. But auto makers such as Hyundai Motor slid as the won rose for a ninth consecutive session to a near-five month high against the dollar, reinforcing concerns a firm currency would eat into profits abroad and put them at disadvantage to Japanese rivals.
The rampant won brought a warning from the finance ministry that South Korea was worried about the currency's recent sharp rise against the dollar and will try hard to "improve the supply-demand situation". The comments raised foreign exchange market talk of potential intervention to cool the won.
Hyundai Motor Co fell 1.6 percent to end at 73,700 won. Shares in South Korea's biggest auto maker have now lost a quarter of their value since the year began.
Worries about the US economy also weighed following disappointing October retail sales in South Korea's second-biggest export market and data showing rising labour costs that raised concerns about inflation.
Memory chip maker Hynix Semiconductor Inc fell 3.16 percent to 33,700 won. Trade volume reached 209.1 million shares worth 2.8 trillion won compared to 218.3 million shares worth 2.8 trillion won on Thursday. Gainers edged out decliners by 418 to 326 with 77 titles ending flat.
Retail investors bought a net 83.9 billion won, while institutional investors purchased a net 84.9 billion won. The December KOSPI 200 futures index added 0.05 point to 180.30, but the underlying KOSPI 200 spot index lost 0.08 point to 179.14. South Korea's junior and tech heavy Kosdaq market rose 0.57 percent to finish at 598.79.