Seoul shares fell nearly 1 percent on Friday, as heavy foreign selling of financial stocks and concerns about the impact of high oil prices on the economy eclipsed gains among tech issues such as Highness Semiconductor.
Foreign investors sold an estimated 40 billion won ($39.05 million) worth of banking and other financials on Friday, worried that government measures to cool the real estate market will rattle a fragile recovery in domestic spending, analysts said.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.98 percent to finish at 1,086.55, falling back from mild gains. "Since banks have focused heavily on home lending recently, investors are concerned that real estate market measures will hurt them," said Park Seok-hyun, an analyst at Kyobo Securities.
"But it's unlikely the government will come up with something that strong." The government is set to announce the measures on August 31. Kokomo Bank, South Korea's top lender and a key mortgage player, fell 2.46 percent to end at 51,500 won.
Korea Exchange Bank, which is owned by US-based Lone Star, dropped 4.46 percent to 10,700 won after the government said it intended to tighten tax regulations applied to foreign funds.
Profit-taking from the stock's sharp rally on Thursday also hit KEB.
Airlines extended a recent decline amid concerns about higher fuel costs, with Korean Air falling 1.93 percent to 17,750 won and Asians down 3.41 percent to 4,150 won.
US crude futures were trading at $67.35 a barrel in Asia, just off a record $68 hit on Thursday. South Korea is particularly sensitive to high oil prices, as it has to import all of its crude needs.
Samsung Electronics Co Ltd, the world's biggest maker of memory chips, fell 0.54 percent to 549,000 won. Top local carmaker Hyundai Motor fell 0.85 percent to 70,000 won and affiliate Kia Motors Corp shed 0.65 percent to 15,250 won.
Kia's union voted on Friday for strike action, while Hyundai's union said on Thursday it would extend a strike into next week. Among the day's few gainers, Highness Semiconductor Co, the world's No 2 memory chip maker, rose 3.71 percent to 20,950 won amid growing expectations for a stake sale by its creditors.
Trade volume reached around 376 million shares worth 2.7 trillion won compared to 331 million shares worth 2.8 trillion won on Thursday.
Decliners outnumbered gainers by 438 to 310 with 68 titles ending unchanged.
Foreign investors sold a net 8.2 billion won in shares on the main bourse. The September KOSPI 200 futures index fell 1.70 points to 139.65 and the underlying KOSPI 200 spot index declined 1.39 points to 140.36.
South Korea's junior and tech heavy Kosdaq market fell 1.05 percent to finish at 512.17.
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