South Korean Stocks Decline Most in Asia Amid Export, Manufacturing Data

South Korean stocks fell, with the benchmark index sinking the most among Asian gauges, as shares traded for the first time this week amid concern the nation’s economic growth is slowing.

The Kospi Index (KOSPI) lost 3.6 percent to 1,706.19 at the 3 p.m. close in Seoul, its biggest retreat since Sept. 23. South Korean markets were shut yesterday for a holiday when the MSCI Emerging Markets Index slipped 3.2 percent. The country’s exchange briefly halted program trading of shares today after futures tumbled. Samsung Electronics Co. and LG Chem Ltd. (051910) led declines among the nation’s biggest companies.

A gauge of Korean manufacturing contracted for a second month in September while the nation’s exports expanded at the slowest pace in three months. South Korea needs to bolster its economy to cope with heightened global uncertainties, Finance Minister Bahk Jae Wan said today.

“Investors are gripped with fears again given the unpredictability of Europe’s debt troubles as well as growth concerns,” said Han Sang Soo, a fund manager at Samsung Asset Management Co. in Seoul, which oversees about $28 billion in assets. “Volatility will be here as those issues won’t be resolved in a day.”

European finance ministers meeting yesterday considered “technical revisions” to a July deal for a second Greek bailout, indicating that bondholders may have to take bigger losses on the nation’s debt.

The Kospi 200 Volatility Index, which tracks the cost of buying protection against losses in the equity gauge of South Korea’s largest companies, rose 12 percent to 45.32, the biggest increase since Sept. 23.

Bear Market

The Kospi sank 16 percent in the third quarter, the most since the last three months of 2008. The gauge has lost 23 percent since reaching a record high on May 2. A drop of 20 percent or more signifies a bear market to some investors. Stocks in the index trade at 8.8 times estimated profit, less than the 9.1 multiple for the MSCI Emerging Markets Index.

Samsung Electronics retreated 1.4 percent to 828,000 won. Hyundai Heavy Industries Co., the world’s biggest shipbuilder, sank 5 percent to 267,000 won. LG Chem, South Korea’s biggest chemicals maker, plunged 8.4 percent to 294,000 won.

A South Korean purchasing managers’ index for September fell to 47.5, according to HSBC Holdings Plc and Markit Economics today. A figure below 50 indicates a contraction.

The nation’s exports rose 19.6 percent last month from a year earlier, slowing from a revised 25.9 percent gain in August, the Ministry of Knowledge Economy said on Oct. 1.

Hyundai Motor lost 2.8 percent to 205,000 won and affiliate Kia Motors Corp. (000270) dropped 3.7 percent to 69,200 won after U.S. sales gains missed consensus analyst estimates. Combined sales for the two automakers rose 14 percent last month, less than the 20 percent gain that was the average of three estimates compiled by Bloomberg.

Poongsan Corp., a copper-product maker, slid 10 percent to 23,000 won after copper in London plunged for a fifth Day. SK Innovation Co., South Korea’s largest oil refiner that also produces oil, sank 9.9 percent after crude and oil-product prices dropped.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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