Seoul shares gave up earlier gains and ended down nearly 2 percent on Thursday, as foreign investor selling continued for a sixth session and falls in automakers and banks like Hyundai Motor and KB Financial Group weighed. Analysts said short-term, speculative funds which had flowed into South Korean stock markets en masse in April were withdrawing amid growing preference for safer assets.
"Speculative funds that came into the market last month on the back of the won's strength are locking in profits as they grow more uneasy about the latest macroeconomic developments," said Lee Sun-yeb, a market analyst at Shinhan Investment Corp. Investors sensed "the pullback of liquidity support measures, and even potentially some tightening steps" in the minutes from US Federal Reserve's April meeting, said Lee Kyung-soo, a market analyst at Shinyoung Investment & Securities.
The Korea Composite Stock Price Index finished down 1.89 percent at 2,095.51 points. KOSPI 200 June futures fell 4.3 points to 276.95 and the KOSPI 200 spot index lost 5.29 points to 276.47. The junior Kosdaq market ended down 2.39 percent at 487.03. The market still has firm support at its 120-day moving average of 2,050 points, analysts said, with buying likely to take place below that level.
Foreign investors were sellers of a net 388 billion won ($356.5 million) worth of stocks, offloading shares for a sixth straight session, the longest selling streak in a month. Foreign investors were net buyers of 3 trillion won worth of stocks in April, according to Korea Exchange data.
Lotte Shopping shares outperformed, edging down 0.3 percent, after South Korea's No 1 retailer reported first quarter operating profit rose 23.5 percent year-on-year to 468.8 billion won. Data also showed sales of foreign luxury brands at South Korean department stores ballooned at their fastest pace in more than three years in April. Korea Electric Power Corp (KEPCO) ended up 0.7 percent after a local media report quoted the vice economy minister as saying government agencies had reached an understanding on the need to hike electricity tariffs.