Shares drop on U.S. falls, eurozone woes

South Korean stocks closed 0.85 percent lower Wednesday on overnight Wall Street falls and growing concerns that France and Greece may reverse course on fiscal austerity measures, analysts said. The local currency fell against the U.S. dollar.

The benchmark KOSPI lost 16.72 points to 1,950.29, a turnaround from a gain in the previous session. Trading volume was moderate at 462 million shares worth 4.90 trillion won ($4.29 billion), with losers outpacing gainers 537 to 306.

U.S. stocks fell to a two-month low on concerns that the newly elected governments in Paris and Athens may backtrack on fiscal austerity measures. Such a move could reignite the debt-crisis situation facing many European countries that would likely exert negative influence on trade, investment and economic growth.

“Problems facing the United States and Europe will not be resolved in the near future,” said Hana Daetoo Securities chief researcher Kim Ji-wan.

He warned that unless there are some meaningful gains in the U.S. market, which generally influences the KOSPI more than developments in Europe, stock prices may experience uncertain times.

Others such as Lee Sang-jae, a senior economist at Hyundai Securities Co., said next week’s summit between the leaders of Germany and France will impact the overall market. He added that U.S. stocks may experience further slides as retail and housing-related data may not reach expectations.

Electronics, autos, chemicals and heavy industries caused stocks to fall with financials posting modest gains.

Market bellwether Samsung Electronics retreated 0.75 percent to 1,331,000 won, with top automaker Hyundai Motor dropping 2.15 percent to 250,000 won.

Kia Motors, South Korea’s second-largest carmaker, lost 1.22 percent to 80,800 won, with LG Chem, a leading manufacturer of rechargeable batteries, tumbling 3.86 percent to 286,500 won.

Hyundai Heavy Industries Co., the world’s largest shipmaker, lost 5.10 percent to 260,500 won, although leading steelmaker POSCO rose 1.45 percent to 385,000 won.

Shinhan Financial Group and Samsung Life Insurance gained 0.24 percent and 0.92 percent, respectively, to 41,250 won and 98,500 won.

The local currency finished at 1,140.4 won to the greenback, down 4.8 won from Tuesday’s close, dealers said. 

(Yonhap News)