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Seoul: Stocks dip on weak oil, impending decision on Samsung's biopharma arm

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[SEOUL] South Korea's Kospi stock index weakened on Wednesday due to a further fall in oil prices, amid investors remaining cautious ahead of the financial regulator's decision on alleged accounting rule violation by drugmaker Samsung BioLogics.

Both the Korean won and bond yields also fell.

International benchmark Brent crude was trading down 0.5 per cent, extending 6.6 per cent loss from the previous session, while US West Texas Intermediate crude slid 0.8 per cent, set to fall for a record 13th straight session of decline, weighed down by weakening global demand and oversupply.

At 0632 GMT, the KOSPI closed down 3.18 points or 0.15 per cent at 2,068.05.

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If Financial Services Commission (FSC) brings charges against the biotech drug arm of South Korea's top conglomerate Samsung Group, trading of its stock will be suspended according to Korea Exchange.

The results should be dissociated with the valuation of the country's overall biopharma industry, as the review is about an alleged violation of accounting rules but not about the value of the company's biopharmaceutical business, said Byun Jun-ho, deputy managing director at Eugene Investment & Securities.

Shares of South Korean oil refineries tumbled, whereas those of airlines leaped as oil prices plunged overnight; SK Innovation Co Ltd and S-Oil Corp closed down 3.3 per cent and 5.3 per cent, respectively. Korean Air Lines Co Ltd and its parent Hanjin Kal Corp surged as much as 9.4 per cent and 13.3 per cent each.

The won was quoted at 1,134.3 per dollar on the onshore settlement platform, 0.09 per cent weaker than its previous close at 1,133.3.

In offshore trading, the won was quoted at 1,134.48 per US dollar, down 0.28 per cent from the previous day, while in one-year non-deliverable forwards it was being transacted at 1,114 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.46 per cent, after US stocks ended the previous session with losses. Japanese stocks rose 0.16 per cent.

The Kospi is down around 16.1 per cent so far this year, and down by 11.60 per cent in the previous 30 days.

The current price-to-earnings ratio is 12.10, the dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.

The trading volume during the session on the Kospi index was 332,675,000 shares and, of the total traded issues of 897, the number of advancing shares was 414.

Foreigners were net sellers of 132,515 million won worth of shares.

The U.S dollar has risen 6.39 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2 2018 and low is 1,146.26 on Oct 11, 2018.

In money and debt markets, December futures on three-year treasury bonds rose 0.05 points to 108.82.

The Korean three-month Certificate of Deposit benchmark rate was quoted at 1.7 per cent, while the benchmark 3-year Korean treasury bond yielded 1.919 per cent, lower than the previous day's 1.95 per cent.

REUTERS