Seoul shares fell to a one-week closing low, weighed down by broad declines in large-cap stocks led by a sharp plunge in LG Chem, with risk appetite subdued on persistent eurozone debt worries and disappointing US economic data.
"The main theme in the market today was of course, the latest issues adding to more concern and uncertainty in Europe, but LG Chem's huge losses today and general weakness seen in other blue chips further dampened an already-low appetite for risk-taking" said Cho Sung-joon, an analyst at NH Investment & Securities.
Despite Spain selling 2.5 billion euros in 2- and 10-year bonds, at the top end of its targeted amount, higher yields on its 10-year notes have raised fears that it may miss its fiscal deficit targets. The Korea Composite Stock Price Index (KOSPI) fell 1.26 percent to close at 1,974.65 points for a second-consecutive weekly loss. Large-cap shares took the brunt of the losses, as the benchmark KOSPI 200 index fell 1.41 percent.
Sentiment was further weighed by data that showed US jobless benefit claims falling only slightly last week, suggesting a slowdown in job creation while other data showed a sharp decline in Mid-Atlantic factory activity and US home sales falling for a second consecutive month. LG Chem, South Korea's largest chemical maker and the seventh-largest listed share on the KOSPI by market capital, plunged 9.2 percent on a flurry of selling after reporting a 45 percent decline in first-quarter profit compared to a year before, which analysts attributed to a double-squeeze between slowing demand in China and rising oil prices.
LG Chem's earnings shock reverberated throughout the sector to drag down other peers, as Honam Petro Chemical plummeted 8.3 percent while Kumho Petro Chemical tumbled 7.1 percent. Among other heavily-traded blue chip stocks, memory-chip maker SK Hynix slid 4 percent while automaker Hyundai Motor fell 2.1 percent.
Shares in Korea Aerospace Industries (KAI) bucked trends to gain 3.7 percent after an announcement by its major shareholders that they were selecting advisors to manage a 40 percent stake sale worth $1.06 billion. Foreign investors were net sellers for a fifth-consecutive session, the longest such streak in four months as offshore players dumped a net 327.8 billion won ($288 million) worth of shares. A total of 511.7 million shares exchanged hands on the main bourse for turnover of 4.75 trillion won ($4.2 billion), while declining shares outnumbered winners 590 to 241.
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