South Korean shares fell on Monday, with exporters such as steelmakers declining after China said it could tighten property regulations to curb housing costs, while local institutional investors took profits after February's gains. The Korea Composite Stock Price Index (KOSPI) closed at 2,013.15 points, down 0.7 percent from a near two-month closing high on Friday.
"China worries have affected the main board. Less-than-great data results, rising costs and inflationary pressure have raised expectations for tighter rules and dented risk sentiment," said Lim Dong-rak, an analyst at Hanyang Securities. On Friday, China said it could increase required downpayments and loan rates for buyers of second homes in cities where prices are rising too quickly.
China's services sector expanded at its slowest pace in five months in February, while Chinese factory growth also cooled to multi-month lows. Korean steelmakers and chemical shares were hit the hardest by China worries, with world's fifth largest steelmaker POSCO down 3 percent while Lotte Chemical fell 7.6 percent.
"Product prices in China for both sectors fell noticeably on a weekly basis, while state-run companies will find it more difficult to raise prices," said Kim Hyun-tae, an analyst at KB Investment & Securities. Profit-taking further weighed on the main board, with local institutions selling a net 427.8 billion Korean won ($395.08 million) of KOSPI shares on Monday.
The KOSPI, which slid 3.4 percent in January, rebounded 3.3 percent in February as it sought to get in on this year's global rise in stock markets. On Monday, auto shares bucked trends by extending gains, as the South Korean won eased to its lowest level in nearly three weeks against the dollar on Monday. Hyundai Motor rose 0.7 percent. "The won's fall is alleviating worries that Hyundai would post disappointing earnings for the April-to-June quarter," said Song Sun-jae, an analyst at Hana Daetoo Securities. Decliners outnumbered gainers 484 to 312. The KOSPI 200 benchmark of core stocks closed down 0.7 percent, while the junior KOSDAQ edged 0.3 percent higher.