Seoul shares turned sharply lower to end down 1.7 percent on Thursday as tech and auto exporters were hit by continued strength in the won, while shipbuilders retreated on order cancellation worries. The Korea Composite Stock Price Index (KOSPI) finished down 1.70 percent at 1,644.63 points. The main index is still up more than 65 percent from the year's low of 992.69 in early March.
"The rapidly strengthening won is causing concerns about the price competitiveness of South Korean exports. And there is also caution over how well third-quarter earnings will come out, and the fourth-quarter outlook," said Kim Seung-han, a market analyst at HI Investment Securities.
Losses were led by automakers, including Hyundai Motor, despite firm growth in their September monthly sales, on concern that the latest strength in the local currency - which touched a one year high against the dollar in early trading - would cut into the price competitiveness of their products.
Shares in Hyundai Motor finished down 8.07 percent at 102,500 won, but were still up about 160 percent year-to-date. Kia Motors dropped 6.72 percent, but was up nearly 165 percent on the year. Key technology exporters also lost ground, with Samsung Electronics shedding 2.82 percent and LG Electronics retreating 6.77 percent.
"If the won strengthens to trade below 1,150 won per dollar, investor worries will significantly worsen," said James Song, an analyst at Daewoo Securities. Shipbuilders continued their slide on fears about potential order cancellations. France's CMA CGM, the world's third largest container shipping firm, needs to restructure its finances and has formed a committee of banks to lead debt talks.
Shipyards including Daewoo Shipbuilding & Marine Engineering are currently working on a number of CMA CGM orders. Daewoo had said earlier it has received orders for eight ships from the French shipper to be delivered by 2011. Hyundai Heavy Industries lost 2.5 percent and Daewoo Shipbuilding shed 4.65 percent.
But defensive issues advanced as investors sought out safer bets amid growing economic and outlook worries. SK Telecom, South Korea's top mobile phone operator, climbed 1.37 percent and KT gained 0.37 percent. Woori Investment & Securities rose 1.79 percent after its holding firm, Woori Finance Holdings said in a filing to the Korea Exchange that the brokerage bought 49 percent of Vietnamese brokerage Bien Viet Securities.
"Woori Investment have for some time been looking for overseas expansion opportunities, and this is seen as a step in that direction," said Park Jin-hyung, an analyst at IBK Securities. Institutions picked up a net 78.35 billion won worth of shares and foreign investors offloaded a net 235.2 billion won.
Retail investors bought a net 165.5 billion won worth of shares. Decliners led advancers 564 to 235, with 78 counters ending flat. A total of 332.5 million shares worth 6.9 trillion won changed hands, compared with 357.4 million shares worth 7.82 trillion won traded on Wednesday. The KOSPI 200 December futures index fell 5.55 points to 215.75, while the KOSPI 200 spot index ended down 3.81 points at 215.94. The junior Kosdaq market ended down 0.67 percent at 502.55 points.