South Korean Stocks Slump Most in Two Months as Foreigners SellSharon Cho
South Korean stocks fell, with the benchmark gauge posting its steepest loss in two months, as foreign investors sold shares and higher oil prices dragged down automakers and refiners.
Samsung Electronics Co., the world’s biggest smartphone maker, declined to a three-month low, while Hyundai Motor Co. dropped the most since May 27. Refiner SK Innovation Co. slid to a two-week low as oil headed for a second weekly gain amid escalating violence in Iraq, where the U.S. said yesterday it will send military advisers.
The Kospi fell 1.2 percent to 1,968.07 at the close in Seoul, its biggest loss since April 25 and the biggest decline among Asian benchmark indexes. International investors sold a net 454.4 billion won ($445 million) worth of Kospi shares as of 3:25 p.m. in Seoul, according to data compiled by Bloomberg.
“Shares are tumbling today as the selloff by global investors is weakening sentiment,” Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd., said by phone in Seoul. “The prolonged tension in Iraq is also impacting oil-related stocks.”
The Kospi has slipped 2.2 percent this year, while the won has gained 2.9 percent against the dollar. The yield on three-year government notes dropped 18 basis points to 2.68 percent this year through yesterday.
Samsung Electronics slumped 1.7 percent, closing at its lowest level since March 26. Hyundai Motor, the country’s biggest carmaker, fell 2.5 percent.
JPMorgan Chase & Co. cut Korean stocks to neutral yesterday, citing reaction to Hyundai Motor’s newest models to concern that Apple Inc.’s iPhone 6 will hurt Samsung Electronics’s smartphone volumes and margins. Local brokerages including Samsung Securities Co. and KB Investment & Securities Co. lowered their second-quarter operating profit estimates for Samsung Electronics to reflect a weaker outlook in smartphone sales in reports yesterday.
“Earnings concerns for South Korean companies in the second quarter led by Samsung Electronics are driving down the shares today,” Park Jae Hong, a Seoul-based fund manager at Brain Asset Management Co., said by phone.
SK Innovation declined 2.4 percent to its lowest level since June 5, while S-Oil Corp. and GS Holdings fell at least 1.8 percent. Brent for August settlement was at $114.97 a barrel on the London-based ICE Futures Europe exchange, down 9 cents, at 4:44 p.m. Sydney time.
U.S. military advisers will work with the Iraqi army to set up joint operations centers to coordinate intelligence and planning without engaging in fighting against militants, President Barack Obama said yesterday.