Seoul: Shares stay defensive on China concerns; won firmer

[SEOUL] South Korean shares recouped early sharp losses on Friday morning after news China guided the yuan firmer, but concerns over its financial markets and North Korea kept investors jittery.

Tensions in the Korean Peninsula grew on reports North Korea has increased frontline troop strength as South Korea readied to restart propaganda loudspeaker broadcasts in retaliation for the North's nuclear test.

The Korea Composite Stock Price Index (KOSPI) retreated 0.1 per cent to 1,902.95 points as of 0228 GMT, its lowest intraday level since Sept 8, 2015. Declining issues outnumbered advancers by 39-to-10.

The People's Bank of China set the daily yuan midpoint fixing firmer for the first time in 9 trading days, after allowing its biggest fall in five months on Thursday, pressuring regional currencies and sending global stock markets tumbling.

"Risk-averse sentiment will persist for a while until Chinese shares gain faster than recent falls in the past few days. Today's volatile movement of China stocks is short of changing the deeply-rooted sour mood," said Rhoo Yong-seok, a stock analyst at Hyundai Securities.

Mr Rhoo added that companies will remain cautious in their outlook when they present fourth-quarter earnings amid negative news from China, North Korea and emerging markets.

The index touched four-month lows in the previous session and has lost 2.9 per cent over the last five days by midday.

Shares of Samsung Electronics Co Ltd rose 0.8 per cent after the company said in a regulatory filing its October-December operating profit would likely be 6.1 trillion won.

Defence industry-related shares surged after South Korea prepared to resume propaganda broadcasts by loudspeaker into North Korea. Victek Co Ltd jumped 26.6 per cent and Speco gained 20.1 per cent.

Meanwhile, foreigners were set to be net sellers, offloading a net 86.6 billion Korean won (S$103.8 million) worth of KOSPI shares by midday.

The South Korean won was up 0.4 per cent at 1,195.6 on the dollar from the previous close of 1,200.6, tracking the firmer Chinese yuan.

REUTERS