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Tuesday September 18, 2:39 PMSeoul shares slump most in a week on credit fearsSEOUL, Sept 18 (Reuters) - Seoul shares fell 1.8 percent on Tuesday, posting its biggest decline in a week, as exporters such as LG.Philips LCD slid on worries continued turmoil in credit markets would hit global consumer demand.Energy-sensitive stocks such as Korean Air Co slid after oil prices surged to a record, while steel makers such as Hyundai Steel Co retreated on news of a potential price-fixing probe of the sector by fair trade authorities. Caution prevailed throughout the day ahead of the Federal Reserve's meeting overnight, with investors widely expecting at least a 25 basis point cut in U.S. interest rates in South Korea's second-biggest export market. [ID:nN14446993] "The credit concerns are resurfacing just as the Fed is about to meet. The problem is that a rate cut has already been priced into markets, and there are worries that the credit problems will continue even after a rate cut," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management. The benchmark Korea Composite Stock Price Index (KOSPI) fell 1.8 percent to 1,838.61 points, ending a three-session winning streak and posting its biggest percentage fall since Sept. 12. As of Monday the country's main index had rebounded 15 percent since hitting a three-month intraday low in mid-August, but is still well below its record 2,015.48 hit in late July amid worries that credit woes would affect global economic growth. Those concerns came to the spotlight again after savers rushed to withdraw deposits at Britain's Northern Rock , which has fallen victim to the sharp rise in borrowing costs between banks. [ID:nSP174798] Still, the KOSPI is up 28.2 percent for the year, the region's second-best performing major market, on expectations solid domestic economic growth. FINANCIALS HIT Exporters slid, with LG.Philips LCD Co Ltd down 6.8 percent to 38,600 won, its biggest decline since June 13, 2006. The flat-panel maker also fell on worries that panel prices were weakening and could be set for a fall as early as next month on softening demand. Hynix Semiconductor Inc fell 3.3 percent to 29,550 won. The global chip market is likely to face a short-term correction because of supply growth, the firm's chief executive said on Tuesday. [ID:nSEO84970] Banks also extended a slide, with Woori Financial Group down 1.9 percent to 20,400 won, due to fears the South Korean financial firm was more exposed to U.S. subprime investments. Fuel-sensitive sectors also slumped after U.S. crude futures soared to a record near $81 a barrel on concerns of a winter supply squeeze in the world's top consumer. Korean Air fell 5.5 percent to 56,900 won. HYUNDAI SEC SLUMPS Steel makers slid on a media report, which was later confirmed to Reuters, that South Korea's antitrust watchdog has started to look into possible price collusion in the sector, with Hyundai Steel dropping 4.5 percent to 75,000 won. [ID:nSEO156981] Hyundai Securities Co slid 8.8 percent to 19,100 won on expectations Hyundai Elevator , which indirectly controls the brokerage, is unlikely to sell its stake. The Fair Trade Commission said on Monday Hyundai Elevator would not be considered a holding company, meaning it is under no legal obligation to sell its indirect stake in Hyundai Securities. Under the law, any company officially classified as a holding company cannot own a financial subsidiary. |
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