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

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Jan. 25 (Bloomberg) -- South Korea’s benchmark stock index fell to a seven-week low as earnings at Kia Motors Corp. missed forecasts and Samsung Electronics Co. said a strengthening currency may hurt profits this year.

Kia Motors Corp., South Korea’s second-biggest carmaker, sank to the lowest level 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, dropped to a two-month low after saying a stronger currency may cut earnings. LG Display Co. led Apple Inc. suppliers lower after the iPhone maker’s shares plunged the most in more than four years.

The Kospi index fell 0.9 percent to 1,946.69 at the close in Seoul, the biggest decline among major Asian benchmark gauges. The measure, which closed at the lowest level since Dec. 4, slipped 2.1 percent this week, 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 most of today’s losses in the Kospi index. 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 tumbled 4.9 percent to the lowest close since Nov. 30, 2010. Fourth-quarter operating income tumbled 51 percent to 404.2 billion won, the company reported today. That’s 35 percent below the average estimate of analysts surveyed by Bloomberg. Hyundai Motor Co., the nation’s biggest carmaker, reported profit yesterday that missed forecasts.

Hyundai Motor lost 3.4 percent. Hyundai Wia Corp., which manufactures auto parts, tumbled 4.1 percent. Hyundai Glovis Co., Hyundai Motor Group’s logistics unit, sank 4.8 percent.

LG Display, which supplies panels to Apple, lost 2.4 percent. SK Hynix Inc., which provides chips, fell 0.2 percent to the lowest close since Oct. 29. 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 fell 2.5 percent to the lowest level since Nov. 30 even after it reported a bigger-than-estimated 76 percent increase in fourth-quarter net income. 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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