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S.Korean shares dragged down by Hyundai; won falls on U.S. rate view
September 18, 2014 / 4:07 AM / 3 years ago

S.Korean shares dragged down by Hyundai; won falls on U.S. rate view

* Hyundai Motor shares battered after $10 bln land bid
    * Won lower as dollar broadly up on Fed rate projections

    By Joonhee Yu
    SEOUL, Sept 18 (Reuters) - South Korean shares fell on
Thursday, pressured by sharp declines in Hyundai Motor and the
group's affiliated units after the automaker won a bid for a
pricey land plot in Seoul.
     A consortium of Hyundai Motor Co, Kia Motors
 and Hyundai Mobis Co placed a 10.55
trillion won ($10.14 billion) winning bid for a land plot
occupied by Korea Electric Power Corp in the heart
of Seoul's Gangnam district, eyeing a plan to build a new global
headquarters on the site. 
    Eyebrows have been raised by its high price tag, more than
three times the appraisal value of 3.33 trillion.($3.21 billion)
    "This deal is going to take a huge chunk out of Hyundai's
vault, and dipping their hands into a cash stash that could have
otherwise been used for higher dividend payouts and R&D is going
to aggravate many investors, especially foreigners," said Ko
Tae-bong, an analyst at HI Investment & Securities.
    Hyundai Motor, the second-largest listing on the
main bourse by market capitalisation, saw its shares tumble 6.2
percent following the announcement.
    Sister firm Kia Motors sank 6.4 percent while
component maker Hyundai Mobis slid 4.8 percent.
    Korea Electric Power Corp, South Korea's largest
electricity provider, rose 4.7 percent on views the land deal
would help the state-owned utility cut back on excessive debt.
    In the broader market, risk appetite cooled as investors
continued to fret over the possibility of an early rate hike by
the U.S Federal Reserve.
    The Korea Composite Stock Price Index (KOSPI) was
down 0.62 percent at 2,049.88 points as of 0313 GMT.
    The Federal Open Market Committee (FOMC) chose to retain a
key phrase of "a considerable time" to describe the timing of
the next interest rate rise at the end of a two-day meeting on
Wednesday, but recent signs of improvement in the U.S economy
have fed underlying worries that a rate change may come sooner
rather than later.
    "Even though the Fed didn't change its tone or language in
its latest policy statement, an analysis of FOMC dot plots are
pointing to higher interest rate forecasts compared to before,"
said Park So-yeon, a market analyst at Korea Investment &
Securities.
    The South Korean won fell on Thursday, as the dollar
made broad gains against major currencies on increasingly
hawkish Fed rate projections.
    The local currency was quoted at 1,040.7 to the
dollar as of 0313 GMT, compared with the Wednesday session close
of 1,034.9.
    September futures on three-year treasury bonds rose
8 basis points to trade at 107.35.
    
                       0313 GMT    Prev close
 Dollar/won             1,040.7       1,034.9
 Yen/won             9.5910/983        9.5443
 *KTB futures            107.35        107.27
 KOSPI                 2,049.88      2,062.61
 * Front-month futures on three-year treasury bonds

 (Reporting by Joonhee Yu; Editing by Jacqueline Wong)

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