Seoul shares slipped on Monday as losses in key exporting issues in the auto and technology sectors pressured the market, but Dongkuk Steel jumped after the company said it had decided against acquiring a stake in Daewoo E&C. Analysts said the strengthening won currency was weighing on key exporters in technology and auto sectors.
"I think market has entered A correctional phase after A recent substantial gains, weighed down in particular by the rapidly strengthening won," said Lee Kyoung-su, a market analyst at Taurus Investment & Securities. The Korea Composite Stock Price Index (KOSPI) finished 0.82 percent lower at 1,710.30 points.
Foreign investors were sellers of a net 103 billion won ($92.21 million) worth of stocks, snapping a buying streak of 21 consecutive sessions - the longest since early March 1998. Blue chip exporters fell as the won rose to a 19-month high, sending Hyundai Motor, South Korea's top carmaker, down 6.72 percent. Samsung Electronics, the world's No 1 memory chip maker, shedding 3.04 percent.
"As the won currency is approaching 1,100 won per US dollar, analysts have turned more cautious on autos even though carmakers like Hyundai Motor have adequate offshore production sites, a rapid fall in the won below 1,100 won per dollar would not be good," said An Sang-joon, an analyst at Tong Yang Securities.
Kia Motors shed 7.22 percent. However, travel issues outperformed, amid expectations of stronger demand for overseas trips. Hana Tour, an online-and-offline tour agency, advanced 2.12 percent. Modetour rose 2.1 percent. Dongkuk Steel jumped 13.33 percent after the company said it had decided not to pursue a stake purchase in Daewoo Engineering & Construction.
Banking issues advanced, with Woori Finance Holdings up 3.6 percent, continuing to ride upward momentum on the back of a successful stake sale by a state agency last week. State-run Korea Deposit Insurance Corp confirmed on Friday that it had sold a 9 percent stake of Woori Finance worth $1 billion in a block trade at the top of the proposed 15,400-16,000 won ($13.71-$14.25) range.
"The stake sale was very successful and this is fuelling Woori Finance shares. Its quarterly earnings are expected to improve as the net interest margin (NIM) has risen, while write-offs have fallen from a year earlier," said Shim Joon-bo, an analyst at HI Investment & Securities.
Shipbuilders also gained, with Hyundai Heavy Industries up 2.16 percent and STX Offshore & Shipbuilding rising 2.9 percent. "Fundamentals for the industry are far from good, as shipbuilding plate prices are very likely to rise in the near future, while demand is still weak," said Joey Lee, an analyst at Shinhan Investment Corporation.
"The rationale now seems to be that as the Chinese yuan is expected to rise quite soon, Chinese competition may be affected in terms of pricing, and some China demand could go to South Korean shipyards," Lee added. Decliners outnumbered advancers 460 to 338, with 86 issues ending flat.
Trading volume stood at 407.3 million shares worth 5.65 trillion won, compared with 370.9 million shares worth 4.77 trillion won in the previous session. The KOSPI 200 June futures index ended down 1.45 points at 225.55, and the KOSPI 200 spot index declined 2.22 points at 224.59. The junior Kosdaq market ended 0.87 percent lower to close at 507.67.