Seoul: Won, shares fall on soft China PMI and weakening yuan

[SEOUL] The South Korean won and shares weakened on Monday morning as a survey on Chinese factory activity for December came in below forecasts, rekindling concerns over the economic health of South Korea's biggest trading partner.

A flare-up in tensions between Saudi Arabia and Japan also spurred a retreat from emerging markets, like South Korea, as investors sought safer assets to hedge against the fallout from another potential crisis in the Middle East.

The won was down 1 per cent at 1,184.4 per dollar as of 0240 GMT.

A Caixin/Markit survey of China's vast manufacturing sector showed activity contracted for a fifth consecutive month, reinforcing fears that the world's second-largest economy may be stuck in a protracted slowdown despite a flurry of stimulus measures.

"China's tepid PMI and sinking yuan currency dragged emerging Asian currencies lower and deepened worries over the economic growth," said Jeon Seung-ji, a foreign exchange analyst at Samsung Futures.

Shares also suffered. The Korea Composite Stock Price Index (KOSPI) lost 1.5 per cent, to stand at 1,931.18 points. Declining issues outnumbered advancers 3-to-1.

Shares in Hyundai Motors Co and its affiliate Kia Motors Corp slipped 2.7 per cent and 2.9 per cent, respectively, after the automakers said they expected their vehicle sales to rise 1.5 per cent this year, lagging industry growth forecasts.

Shares of Doosan Heavy Industries & Construction Co Ltd lost 4.1 per cent despite the company announcing it had scored a 666.9 billion won order in Vietnam.

Refiners declined as Saudi Arabia's execution of a prominent Shi'ite Muslim cleric spurred regional anger and geopolitical tensions. The tensions stoked concerns over oil prices and refiners' shares. S-Oil Corp lost 1.9 per cent.

Foreigners were set to be net sellers for a 21st consecutive session, offloading a net 60 billion won worth of KOSPI shares in the morning trade.

March futures on three-year treasury bonds gained 0.04 points at 109.63.

REUTERS