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Seoul: Stocks slip on downbeat quarterly earnings

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[SEOUL] South Korean shares slid on Thursday as tepid corporate earnings and murky outlook by a major chemical firm deflated sentiment, while chip giants rose after SK Hynix revealed its plan to cut investment and production to support a modest rebound in chip demand. The won and the benchmark bond yield fell.

South Korean markets are palpably underperforming global markets due to a sluggish economy and weak corporate earnings, said Lee Young-gon, an analyst at Hana Financial Investment.

South Korea's economy swung back to growth in the second quarter, dodging a technical recession, although the expansion was mostly driven by government spending, suggesting the central bank may need to cut rates again to stoke demand.

Shares of LG Chem closed 5 per cent down after the company lowered profit margin estimate for its battery business and posted a 62 per cent fall in its second-quarter operating profit. This sent the chemical sub-index 2 per cent lower, making it the biggest percentage loser among Kospi sub-indices.

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SK Hynix said it would cut DRAM output capacity and investment going forward, soothing investor worries on memory chip supply glut. This drove its shares up 2 per cent, as well as shares in Samsung Electronics which ended up 1.7 per cent.

Shares of Hyundai Mobis jumped 5.6 per cent to their highest level since May last year, after the company posted second-quarter results above market consensus.

Shares of web portal operator Naver Corp surged 8.5 per cent, marking their highest since early March, after the company said it would spin-off its online payment system business.

The Seoul stock market's main Kospi index closed down 7.81 points or 0.38 per cent at 2,074.49.

Foreigners were net buyers of 70.7 billion won worth of shares on the main board.

The won was quoted at 1,181.5 per dollar on the onshore settlement platform, 0.30 per cent lower than its previous close at 1,177.9.

In offshore trading, the won was quoted at 1,181.4 per US dollar, down 0.3 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,180.2 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.25 per cent, after US stocks registered record closing highs. Japanese stocks rose 0.22 per cent.

The Kospi has risen 1.64 per cent so far this year, but lost 1.3 per cent in the previous 30 trading sessions.

The current PE 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 590.85 million and, of the total traded issues of 894, the number of advancing shares was 152.

The won has lost 5.6 per cent against the U.S. dollar so far this year.

In money and debt markets, September futures on three-year treasury bonds rose 0.06 points to 110.85, while the 3-month Certificate of Deposit rate was quoted at 1.55 per cent.

The most liquid three-year South Korean treasury bond yield fell by 1.8 basis points to 1.304 per cent, while the benchmark 10-year yield fell by 3.7 basis points to 1.429 per cent. 

REUTERS