Foreign selling ends market’s four-day run

Korean shares fell 0.71 percent yesterday, retreating from a four-day winning streak as foreign shareowners dumped their investments despite remarks by U.S. Federal Reserve Chairman Ben Bernanke on Tuesday that the central bank was committed to highly accommodative policies.

The benchmark Kospi dropped 14.4 points to close at 2,017.24. Retail and institutional investors were buyers of local shares, while foreign investors were big sellers.

Shares of the top three blue chips fell by more than 1 percent, with Samsung Electronics dipping 1.28 percent to close at 1.47 million won ($1,390). Samsung fell as investors awaited a U.S. court decision on how much the handset maker should pay Apple for patent infringement. Hyundai Motor also went down 1.55 percent to 254,500 won while shares of Hyundai Mobis fell 1.46 percent to close at 303,000 won. Shares of Kia Motors also plunged 1.59 percent to 61,700 won.

Some major IT-related shares gained ground. Naver, the country’s largest portal, jumped 1.94 percent to close at 630,000 won, while shares of LG Electronics increased 0.9 percent to 67,500 won. Shares of KT jumped 1.07 percent to 33,100 won

Meanwhile, the won snapped a four-day gain by retreating from a nearly two-year high on concern that policy makers will curb its rally to protect exports. Government bonds were steady.

“The Korean economy is on a recovery path, so there’s a risk of market intervention to preserve export competitiveness,” said Park Sang-hyun, chief economist at HI Investment and Securities. “We may see won gains being capped at 1,050 through year-end” if the yen continues to weaken, he said.

The won fell 0.2 percent to 1,058.09 per dollar in Seoul, according to data. It earlier touched 1,054.9 approaching the two-year high of 1,054.35 on Oct. 24.

One-month implied volatility in the won, a measure of expected moves in the exchange rate used to price options, declined seven basis points, or 0.07 percentage point to 5.99 percent.

The yield on Korea’s 2.75 percent sovereign bonds due June 2016 was unchanged at 2.95 percent, according to Korea Exchange prices. The rate has climbed 13 basis points so far in November.

BY LEE EUN-JOO, BLOOMBERG [angie@joongang.co.kr]