South Korean shares extended a losing streak into a fourth day on Wednesday, with Samsung Electronics, the world's largest memory chip maker, and SK Hynix, the second largest, catching a chill from US rivals' weak forecasts.
The main Korea Composite Stock Price Index (KOSPI) fell 0.17 percent to close at 1,826.39 points, reflecting Korean firms' lacklustre earnings and general concern about slowing global growth and stop-start progress in tackling the eurozone debt crisis.
"Investors are worried that the prolonged spell of slow growth may be translating over to weakened corporate earnings for the second-quarter and beyond, with growth-sensitive cyclicals reacting worst to the concerns," said Ham Sung-sik, an analyst at Daishin Securities. Growth-sensitive cyclical stocks underperformed with shipyards leading. Hyundai Heavy Industries fell 2.5 percent while Daewoo Shipbuilding & Marine Engineering slid 3 percent.
Samsung Electronics fell 0.8 percent and SK Hynix slumped 3.2 percent following the weak forecasts from US chipmakers Applied Materials Inc and Advanced Micro Devices.
Investors appear reluctant to take fresh positions ahead of an options expiry date and a policy rate meeting by South Korea's central bank on Thursday, as well the release on Friday of China's second quarter GDP data, which is expected to show the slowest growth in at least three years. Ham said wide basis spreads and dashed risk appetites posed a risk of pullbacks when the options expire, and there was also some trepidation ahead of China's GDP data, as forecasts have been revised downward several times.
Trading was thin on Wednesday, with 3.6 trillion won ($3.2 billion) worth of shares exchanging hands on the market.
Comments
Comments are closed.