Korean Stocks Drop Most in Asia as Auto Shares Slip: Seoul Mover

South Korea’s benchmark stock index fell the most in 10 weeks as earnings at Kia Motors Corp. (000270) missed forecasts and Samsung Electronics Co. (005930) said a strengthening currency may hurt profits this year.

Kia Motors Corp., South Korea’s second-biggest carmaker, sank 5 percent to the lowest in more than two years after fourth-quarter profit dropped as a strengthening Korean won eroded the value of its exports. Samsung Electronics Co., which reported better-than-estimated profits, lost 2.6 percent after saying a stronger currency may cut earnings. LG Display Co. led Apple suppliers lower after the iPhone maker’s shares plunged the most in more than four years.

The Kospi index fell 1.2 percent to 1,940.66 at 1:37 p.m. in Seoul, the biggest decline among major Asian benchmark gauges. The measure is heading for its steepest loss since Nov. 13 and has slipped 2.3 percent this week, bound for a third straight drop. Foreign investors sold a net $659 million of Korean stocks this year through yesterday, the most among 10 Asian markets tracked by Bloomberg.

“Disappointing automaker earnings led some investors to cut holdings because the solid pace of growth the companies had been showing in the past few years won’t be the case this year,” Chung Yun Sik, chief investment officer for equities at ING Investment Management Korea Ltd., said by phone today. “While Samsung had another strong quarter, investors are worried as the company won’t be completely free from margin contraction in smartphones amid growing competition.”

Second-Cheapest

The won rose 8.3 percent in 2012 and reached a 17-month high of 1,054.49 per dollar on Jan. 15. The currency weakened for a third day today.

Gauges of electronic and transport equipment makers contributed to about three-quarters of today’s losses in the Kospi index. (KOSPI) The benchmark measure trades at 9 times estimated profit, compared with the five-year average of 10.9 times, making it the cheapest in Asia after Pakistan, according to data compiled by Bloomberg.

Kia’s fourth-quarter operating income tumbled 51 percent to 404.2 billion won, the company said in a regulatory filing today. That’s 35 percent below the average estimate of analysts surveyed by Bloomberg. Hyundai Motor Co. (005380), the nation’s biggest carmaker, reported profits yesterday that missed forecasts.

Hyundai Motor retreated 3.6 percent. Hyundai Wia Corp. (011210), which manufactures auto parts, tumbled 6.2 percent. Hyundai Glovis Co., the logistics unit of Hyundai Motor Group, sank 6.6 percent.

LG Display, which supplies panels to Apple, lost 2.8 percent. SK Hynix Inc., which provides chips, fell for a fourth day. Apple plunged yesterday after posting the slowest profit growth since 2003 and the weakest sales increase in 14 quarters, fueling concern that mounting costs and competition may curtail growth.

Samsung Electronics, which reported fourth-quarter net income rose by a more-than-estimated 76 percent, is poised for the lowest close since Nov. 30. The company said the strengthening won may cut operating profit by at least 3 trillion won this year.

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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