Stocks down 1.31% on industry concerns

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Stocks down 1.31% on industry concerns

Korean stocks closed 1.31 percent lower yesterday, following the earnings shock from GS Engineering & Construction, which raised concerns over the listed firms’ first quarter earnings. The benchmark Kospi fell 25.57 points to finish at 1,924.23, returning the entire gains of the past two days.

Foreign investors sold equities on concern that profit from builders and shipyards will slump and North Korea tensions may increase.

GS Engineering & Construction, which reported an unexpected loss this week, tumbled by the daily limit for a second day. Hyundai Heavy Industries led declines among shipbuilders, falling 6 percent. Hyundai Mobis, Korea’s No. 1 auto parts maker slumped 6.6 percent after Woori Investment & Securities said the company’s quarterly earnings may fall short of consensus estimates. Foreigners sold a net 47 billion won ($41.6 million) worth of stocks listed on the Kospi, after two days of net purchases, Korea Exchange data show.

“Some foreign investors appear to have reduced their positions because they were uncertain how the situation on the Korean Peninsula will develop over the weekend,” Im Jeong-jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management. “There were also jitters over earnings for some industries.”

GS Engineering tumbled 15 percent to the lowest level since July 2005. The Seoul-based builder posted an operating loss of 535.4 billion won for the first quarter. Samsung Engineering, which is scheduled to report its quarterly earnings on April 16, sank 9.1 percent.

Hyundai Heavy dropped to the lowest since January 2010, while Samsung Heavy Industries lost 6.2 percent. An earnings turnaround at the country’s shipbuilders will be difficult in 2013, Hyundai Securities said in a report today.

STX Offshore, the world’s fourth-largest shipyard, fell 13 percent to close at 3,230 won, the lowest price since it started trading in October 2003. STX Engine, the world’s third biggest marine engine maker, fell 15 percent to 4,125 won.

The won was little changed today and gained 0.2 percent this week to 1,129.40 per dollar in Seoul, according to data compiled by Bloomberg.kjy@joongang.co.kr

By Kim Jung-yoon, Bloomberg

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