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Market takes hit on shipbuilding concerns

Aug 05,2008
Korean stocks finished nearly 2 percent lower yesterday, buffeted by concerns that shipbuilders may face order cancellations and by losses during Wall Street’s previous session, analysts said.

The benchmark Kospi lost 30.72 points to end at 1,543.05. Volume was thin at 242.2 million shares worth 4.11 trillion won ($4.04 billion). Losers outpaced gainers 626 to 174.

“The Seoul bourse fell substantially compared to other Asian markets, dragged by landslide losses among shipyards and external risks such as Wall Street’s drop on Friday,” said Bae Sung-young, an analyst at Hyundai Securities.

On Friday, Daewoo Shipbuilding and Marine Engineering, the world’s third-largest shipbuilder, said it canceled an order valued at 619 billion won for eight container vessels after the client failed to make a payment. This raised concerns that other shipbuilding orders may decline.

Samsung Heavy Industries declined 7.9 percent, the most since Jan. 30. Korea is the world’s largest shipbuilding nation.

Shipping lines also fell on concerns that financing for vessel purchases will tighten amid a global credit contraction. Hanjin Shipping, the nation’s biggest shipping line, retreated 8.5 percent, the most since Oct. 22. Hyundai Merchant Marine lost 1.8 percent.

Most blue chips slumped hard. Steel and finance shares were also dented. Top steelmaker Posco lost 3.4 percent and brokerage house Samsung Securities shed 2.6 percent.

Tech exporters and machinery producers also finished in the minus column. Panel giant LG Display slumped 3.0 percent and Hynix Semiconductor slipped 2.6 percent.

Hyundai Motor, Korea’s largest automaker, retreated 2.4 percent.

The company said on Aug. 1 that July sales in the domestic market dropped 3.6 percent after labor strikes disrupted production. U.S. sales fell 6.5 percent in the same period.

Ssangyong Motor Co., the Korean unit of China’s biggest automaker, declined 4.7, the most since July 15. Meanwhile, Samsung Electronics, the market bellwether, remained the same at 565,000 won ($555).

Tech-heavy Kosdaq declined 9.3 points to end at 526.49.

Yonhap, Bloomberg


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