Korean shares edge down on fresh N. Korea risk

South Korean stocks inched down Wednesday as investors took to the sidelines ahead of the earnings season, while a fresh provocation from North Korea spooked wary investors here. The local currency lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) declined 1.69 points, or 0.08 percent, to 1,995.12. Trade volume was moderate at 363.1 million shares, with losers beating winners 429 to 377.

The so-called North Korea risk resurfaced after a North Korean committee handling inter-Korean relations said the communist state will launch an all-out war against the South. Such a threat is not new, but it follows a series of recent provocations that included a nuclear test and a long-range rocket launch.

"Investors are less sensitive to North Korea risks as they have periodically surfaced through recent missile launches and a nuclear test. They do not appear to be a strong factor that could single-handedly turn the table around," said KDB Daewoo Securities analyst Ko Seung-hee.

"The drop appears to be rather linked to the supply side as we continue to see large quantities of sales from fund managers and institutional investors, while most investors appear to be sidestepping ahead of the earnings season," he added.

Both individual and institutional investors were net sellers, dumping a combined net of 84.1 billion won ($72.4 million), while foreigners scooped up a net 7.3 billion won.

Other Asian markets joined the downward trend with Hong Kong's Hang Seng index slipping 0.62 percent as of 3:50 p.m. (Seoul time), while Japan's Nikkei 225 also lost 0.28 percent. The Shanghai Composite Index was up 0.12 percent, paring earlier losses.

Most large caps ended up in negative terrain, while market bellwether Samsung Electronics advanced 0.79 percent to 1,279,000 won.

Industry leader Hyundai Motor slipped 0.63 percent to 158,000 won, while its smaller affiliate Kia Motors plunged 1.97 percent to 49,800 won.

Cosmetics giant AmorePacific gained 0.13 percent to 381,500 won, but top portal operator Naver fell 2.31 percent to 634,000 won.

The local currency closed at 1,161.20 won against the U.S. dollar, down 7.60 won from Tuesday's close, which marked the highest level since the start of the year.

Bond prices, which move inversely to yields, closed lower. The yields on three-year Treasury notes remained unchanged at 1.512 percent while the return on the benchmark five-year government bond gained 0.7 basis point to 1.620 percent. (Yonhap)