SEOUL (Thomson Financial) - South Korean shares closed lower on Friday, with
the key KOSPI index posting its first weekly fall in three weeks, after crude
oil prices swept past $124 a barrel, stoking fears about inflation and the
economy.
Investors also exercised restraint ahead of a three-day weekend and with
most Asian markets spooked by the rapid rise in oil prices. South Korean
financial markets will be closed on Monday for a public holiday.
The KOSPI index closed down 24.30 points or 1.3 percent at 1,823.70 after
trading between
1,818.27 and 1,854.73. The index fell 1.3 percent over the week.
"Inflation fears, sparked by record oil prices and a weaker local currency,
are discouraging
investors," said Lee Kyung-soo, an analyst at Daewoo Securities, who expects the
KOSPI to fall to 1,750.
Lee said sharp movements in the foreign exchange market could destabilize
market sentiment. While a weaker currency boosts overseas earnings of exporters,
it also increases import prices.
The South Korean won closed higher against the U.S. dollar after a volatile
session on Friday,
recovering from a seven-day losing streak that dragged the local currency to
31-month lows.
The won closed trading at 1,044.70 to the dollar after tumbling as low as
1,052.80. On Thursday the won closed at 1,049.60, its weakest level since late
October 2005.
Volume traded reached 272 million shares worth 5.8 trillion won.
Decliners beat gainers 511 to 278, with 78 issues unchanged.
Institutions were net sellers of shares worth 608.3 billion won, while
retail investors were net buyers of 459.6 billion won worth. Foreign investors
were net buyers of 125.5 billion won worth of shares.
Exporters such as technology counters and automakers retreated after recent
gains as the won
rebounded.
Samsung Electronics fell 2.6 percent to 709,000 won and LG Electronics
tumbled 5.1 percent to 150,000 won.
Hyundai Motor was off 1.2 percent at 88,000 won after an eight-session
advance.
Most banks retreated due to concerns over narrowing margins amid stiffer
competition and higher funding costs, with Kookmin Bank down 2.1 percent at
65,200 won and Shinhan Financial Group off 1.1 percent at 53,400 won.
SK Energy lost 3.0 percent to 112,500 won on worries that the nation's top
refiner may not be
able to increase oil prices as much as it wants because of government efforts to
stabilize prices.
Hynix Semiconductor edged up 0.3 percent to 29,200 won on hopes that its
tie-up with Taiwan's ProMOS Technologies will help it maintain its market share
in the memory chip industry.
The two companies said on Thursday they have concluded their months-long
talks to extend their partnership further into advanced processing technology.
Hynix also said it plans to buy up to a 10 percent stake in its Taiwanese
partner.
Shipbuilders also advanced, backed by hopes of more orders for crude
carriers.
Hyundai Heavy Industries was up 1.0 percent at 369,500 won and Samsung Heavy
Industries rose 1.2 percent to 39,050 won.
($1 = 1,044.7 won)
saeromi.shin@thomsonreuters.com
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