[SEOUL] South Korean shares fell on Friday as foreigners resumed their selling spree amid expectations that the Bank of Japan would leave the door open for further policy easing at a meeting later in the day.
Additional stimulus from the BOJ could spark renewed weakness in the yen, putting further competitive pressure on South Korean exporters who are already struggling with weak global demand.
The Korea Composite Stock Price Index (KOSPI) was down 0.6 per cent at 1,896.49 points as of 0212 GMT.
For the month of January, the KOSPI looked set for a loss of 3.3 per cent, its third straight month of declines.
BOJ board members are expected to stand pat on policy but debate whether the risks from volatile markets and slowing global growth have heightened enough to warrant easing monetary policy further.
"It won't be easy for the BOJ to play the asset-purchasing card when factors like volatile oil prices persist that can heighten the fluctuation of global financial markets," said Lee Ha-yeon, an analyst at Daishin Securities.
"And even if it does ease further, there will be very little the central bank will be able to do in terms of policy from then on, especially if markets keep moving sharply." Foreign investors were net sellers of 255.6 billion Korean won (S$301.95 million) worth of KOSPI shares near mid-session. Offshore players have been selling South Korean stocks since late last year after the US central bank raised interest rates and Chinese markets turned more volatile.
Samsung SDS Co Ltd shares were trading down 13 per cent near midday, slightly recovering from a record low after Samsung Group said on Thursday its de facto leader will raise 380 billion won by selling a 2.05 per cent stake in the IT firm.
Shares in web portal operator Naver Corp were down more than 3 per cent to an over one-month low on Friday after its fourth-quarter profit growth fell short of market expectations.
Decliners outnumbered advancers 416 to 367.
The KOSPI 200 benchmark of core stocks was down 0.6 per cent, while the junior KOSDAQ inched down half a percent.
The South Korean won was nearly flat in early trade.
In local trading, the won was quoted at 1,206.5 against the dollar, up 0.2 per cent from its previous close.
March futures on three-year treasury bonds were trading down 0.03 points at 109.71.