Seoul shares fell 0.8 percent on Monday as steel issues including POSCO dragged on the market, with caution pervading on news of an India interest rate hike and the approval of US healthcare reform. Buying appetite dried up after a weak finish on Wall Street and a recent gaining streak, with investors awaiting Wall Street's reaction to the approval of US healthcare reform, said Kim Seong-bong, a market analyst at Samsung Securities.
The US House of Representatives gave final approval to a sweeping healthcare overhaul on Sunday, expanding insurance coverage to nearly all Americans. Foreign investors were sellers of a net 15.3 billion won ($13.50 million) worth of stocks, snapping a six-session buying streak. Analysts said investors were also on edge as they awaited a decision on support for debt-laden Greece.
European leaders sent out conflicting signals at the weekend over aid to Greece, with Germany's Angela Markel urging Athens to solve its debt problems alone and Italy's Silvio Berlusconi strongly backing EU support. The Korea Composite Stock Price Index (KOSPI) finished down 13.44 points at 1,672.67 points.
Steelmakers retreated as negotiations on raw material contract prices dragged on, and on news of India's interest rate hike, analysts said. "Amid the likelihood of raw material price hikes, investors are worried whether steelmakers can reflect those rises in the prices of their products," said Lee Won-jae, an analyst at SK Securities. He added that steelmakers' first quarter earnings were likely to come below market expectations due to continued weakness in construction and shipbuilding sectors.
Shares in POSCO, the world's No 4 steelmaker, lost 3.29 percent and Hyundai Steel, shed 2.67 percent. Shipping issues retreated after falls in the Baltic Dry Index, which tracks the cost of shipping key commodities. Shares in Hanjin Shipping fell 4.0 percent and STX Pan Ocean shed 1.15 percent.
Crude refiners retreated, with S-Oil, South Korea's No 3 refiner, going down 2.72 percent. "As heating usage falls from March, refining margins could weaken. But first quarter earnings will probably come out firm, in line with expectations," said Lee Jeong-hun, an analyst at Hana Daetoo Securities.
Banking issues declined, with KB Financial Group shedding 1.7 percent and Shinhan Financial Group dropping 2.31 percent. Institutions offloaded a net 147.24 billion won worth of shares and retail investors picked up a net 258.6 billion won worth. Decliners outnumbered advancers 501 to 289, with 85 issues ending flat.
Trading volume stood at 342.14 million shares worth 3.73 trillion won, compared with 433.3 million shares worth 4.13 trillion won in the previous session. The KOSPI 200 June futures index ended down 1.95 points at 219.40, and the KOSPI 200 spot index lost 1.96 points to 218.52. The junior Kosdaq market declined 0.1 percent to close at 527.07.