Seoul shares recover to end flat; Hyundai Motor up
Reuters - 35 minutes ago
By Rhee So-eui
SEOUL, Dec 29 - Seoul shares ended flat on Monday, erasing nearly all of their earlier 3 percent loss on buying from pension funds, with gains in Hyundai Motor <005380.KS> and LG Electronics <066570.KS> offsetting weak chip and telecom stocks.
The Korea Composite Stock Price Index <.KS11> finished down 0.02 percent at 1,117.59 points, above the day's low of 1,084.26 but extending its losing streak for a fifth consecutive session.
Pension and other state funds were scooping up select blue chips as they sought to lift the market before the year's closing, analysts said.
But South Korea's National Pension Service has scaled back its stock investment target for 2009, citing turbulent market conditions, weighing on the market outlook for next year. [ID:nSEO276616]
Other investors moved to the sidelines as concerns grew that the market could undergo prolonged weakness in January with companies struggling to fight the economic downturn.
"The need for restructuring is spreading from several troubled companies to the entire corporate sector, including large business groups," said Kim Seong-joo, an analyst at Daewoo Securities. "The struggles by companies could make the market swing in January."
A dismal outlook for the overall economy and poor company earnings due in January will likely continue to weigh on investor sentiment, with data on Monday showing South Korea's consumer sentiment tumbled to a 10-year low in December. [ID:nSEO277349]
Hyundai Motor jumped 3.95 percent, after news that General Motors Corp's <GM.N> auto finance affiliate won access to government lending programmes. Hyundai's affiliate Kia Motors <000270.KS> also climbed 3.32 percent.
LG Electronics rose 3.31 percent but Samsung Electronics <005930.KS> lost 0.44 percent.
Ssangyong Motor <003620.KS> ended down 0.5 percent following news that its top shareholder SAIC Motor Corp <600104.SS> of China was seeking support for the troubled Korean carmaker from the South Korean government and banks. [ID:nSHA293681]
Leading telecom companies fell after the eligibility date for dividend payouts this year passed.
KT Corp <030200.KS>, the country's top fixed-line and broadband provider, fell 1.05 percent while the largest local mobile carrier SK Telecom <017670.KS> slid 1.87 percent as investors who had bought high-dividend telecom shares unloaded the stocks after Friday's deadline for 2008 dividend payments.
Memory chip maker Hynix Semiconductor <000660.KS> also dropped 4.18 percent as investors shunned the stock ahead of its planned new share issue to raise capital.
Daewoo Shipbuilding and Marine Engineering <042660.KS> fell 3.15 percent after delays in its sale to Hanwha Group. Hanwha Group's de facto holding firm, Hanwha Corp <000880.KS>, lost 8.6 percent.
Banks narrowed early losses but many still ended in negative territory, with Hana Financial Group <086790.KS> ending down 2.31 percent and Korea Exchange Bank <004940.KS> falling 2.9 percent.
With banks bustling to raise new capital on the prospect of rising bad debt and dwindling earnings, Citigroup Inc <C.N> provided $800 million of new capital into its South Korean banking arm. [ID:nSEL000415]
"Banks will remain under pressure until their capital bases are fully increased and it becomes clear how much in bad loans they would incur from troubled companies," said Kim Hak-kyun, an analyst at Korea Investment & Securities.
Energy price-sensitive stocks also fell on higher oil prices, with Korean Air Line <003490.KS> and Asiana Airlines <020560.KS> declining 1.02 percent and 3.52 percent, respectively.
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