Currency continues to undermine market

Korean stocks closed 0.23 percent lower yesterday as prolonged currency volatility continued to weigh on the market, analysts said. The local currency fell against the U.S. dollar.

The benchmark Kospi edged down 4.42 points to 1,931.77. Trading volume was moderate at 407.2 million shares worth 3.5 trillion won ($3.22 billion) with losers outpacing gainers 410 to 383.

“Due to the prolonged appreciation of the local currency against the Japanese yen, earnings outlook for Korean firms remain cloudy,” said Lim Dong-lak, an analyst at Hanyang Securities.

“The strong won is attributable to stimulus measures taken by advanced countries,” Lim added. “It is not because South Korea boasts sound economic conditions.”

Lim also said the European Central Bank meeting scheduled yesterday may also have an adverse impact on Korea’s currency if the bank comes up with stimulus plans.

Foreigners scooped up a net 79.6 billion won worth of local shares, and retail investors purchased a net 13.5 billion won. On the other hand, institutional investors offloaded a net 83.3 billion won.

Tech blue chips fell, with market behemoth Samsung Electronics losing 0.49 percent to 1,420,000 won, and Samsung SDI, the world’s top maker of plasma display panels, moving down 1.08 percent to 137,500 won.

The polysilicon maker OCI fell 0.62 percent to 161,000 won due to the lower-than-expected earnings for the fourth quarter of 2012.

Defense shares such as Huneed Technologies, on the other hand, increased 0.24 percent to reach 4,150 won, due to the heightened tension with North Korea.

NHN, Korea’s top Internet portal operator, advanced 3.09 percent to 233,500 won after the firm announced that its fourth-quarter earnings jumped 49.1 percent from a year earlier, buoyed by increased revenue from ad and messenger services as well as currency gains from a weakening Japanese yen.

The local currency closed at 1,088.30 won against the dollar, down 0.20 won from Wednesday’s close, following the rising uncertainties about the euro zone, dealers said.

Bond prices, which move inversely to yields, closed flat. The yield on three-year Treasuries finished unchanged at 2.72 percent and the return on the benchmark five-year government bonds also held steady at 2.85 percent. Yonhap