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Seoul shares drop to two-week low; builders weigh
September 26, 2012 / 6:30 AM / 5 years ago

Seoul shares drop to two-week low; builders weigh

* KOSPI down 0.55 pct on worries about health of global economy

* Builders lose ground after news Kukdong may go bankrupt

* Hyundai Motor climbs as Japanese rivals suffer in China

By Hyunjoo Jin

SEOUL, Sept 26 (Reuters) - Seoul shares fell to their lowest levels in nearly two weeks on Wednesday, with some market participants saying that the correction could continue for the rest of the week as worries about the health of the global economy preoccupy investors.

Builders led the market’s decline after media reports said Kukdong Engineering & Construction may go bankrupt due to liquidity problems. The unlisted company was not available for comment when contacted by Reuters.

Signs of slowing economic growth have taken centre stage again after equity markets rallied earlier this month on monetary easing measures taken by the U.S Federal Reserve and the Bank of Japan, as well as on the ECB’s bond-buying plan.

Foreigners resumed buying, but institutional investors dumped stocks, although with sentiment also hurt by protests in Spain that has underscored the country’s financing difficulties.

“Despite ample liquidity in the market, investors remain concerned about whether economic fundamentals are really improving,” said Kim Hak-kyun, an analyst at Daewoo Securities.

The Korea Composite Stock Price Index (KOSPI) ended down 0.55 percent to 1,980.44 points, its lowest closing level since Sept. 13. The KOSPI finished down 0.6 percent the previous day.

“The KOSPI is under pressure and is suffering a technical correction, and this is likely to continue this week,” said Park Seok-hyun, an analyst at KTB Investment & Securities.

But Hyundai Motor, South Korea’s second most valuable stock after Samsung Electronics, bucked the trend, rebounding 1.02 percent.

Korea Investment & Securities said in a report that Hyundai gained market share in China in August, while its Japanese rivals fell because of the territorial dispute between Japan and China.

Japanese automakers including Toyota Motor Corp and Nissan Motor Co. are cutting back production in China in the wake of anti-Japan protests that shuttered dealerships and darkened their sales outlook in the world’s biggest car market.

Construction firms were among biggest losers, after media reports about possible bankruptcy of Kukdong E&C. Kumho Industrial slumped 5.62 percent and Daelim Industrial lost 3.29 percent.

“The news fuelled worries about builders, which are expected to report poor quarterly earnings next month, as weak demand squeezes margins,” said Cho Joo-hyung, an analyst at Kyobo Securities said.

Woongjing Holdings, the parent firm of Kukdong E&C, slumped by the exchange’s daily limit of 15 percent. A spokesman for Woongin Holdings was not available for comment.

Korea Electric Power Corp (KEPCO) closed up 3.53 percent.

“KEPCO, which posted its worst loss in the second quarter, will see its earnings improve sequentially, helped by electricity rate hikes and oil price falls,” said Lee Jeong-min, an analyst at IBK Investment & Securities.

Move on day -0.55 percent

12-month high 2,057.28 14 March 2012

12-month low 1,644.11 26 Sept 2011

Change on yr +8.47 percent

All-time high 2,231.47 27 April 2011

All-time low 93.10 6 January 1981 (Editing by Eric Meijer)

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