South Korean stocks sank 0.66 percent Tuesday as investors dumped pharmaceutical and cosmetics shares on gloomy earnings outlooks, analysts said. The local currency lost ground against the U.S. greenback.
The benchmark Korea Composite Stock Price Indexlost 13.64 points to close at 2,040.29. Trading volume was moderate at 494.2 million shares worth 8.2 trillion won ($7.3 billion) with decliners outnumbering gainers 453 to 368.
“Pharmaceutical and cosmetics firms had been on a roll to lead the recent market rally. They are heavy and somewhat overvalued,” said Lawrence Kim, an analyst from NH Investment & Securities Co. “But they were hit hardest by Middle East Respiratory Syndrome.”
Since the MERS outbreak on May 20, it has claimed 33 lives, with nearly 190 people infected. The viral disease has kept Chinese shoppers from visiting South Korea and made local people reluctant to receive medical treatment.
“Investors have already expected their poor second-quarter performances. But they suspect that the MERS impact would continue into the third quarter, considering sluggish domestic demand,” said Kim.
Leading pharmaceutical firm Hanmi Pharm plunged 10.88 percent to 446,500 won and its holding company Hanmi Science dived by a daily limit of 30 percent to 128,500 won.
Yuhan Corp. slumped 13.77 percent to 250,500 won and Green Cross Corp. sank 11 percent to 222,500 won.
Top cosmetics maker AmorePacific tumbled 10.07 percent to 384,000 won and No. 2 LG Household & Health Care toppled 3.66 percent to 710,000 won.
However, tech giant Samsung Electronics rose 0.81 percent to 1,240,000 won following its second-quarter earnings estimate.
Cheil Industries, Samsung Group’s de facto holding company, finished flat at 177,000 won, and Samsung C&T, the group’s construction and trading unit, fell 2.42 percent to 64,400 won.
Earlier in the day, a Seoul court ruled in favor of the group’s share sale plan in a bid to merge the two companies.
The index of the tech-savvy secondary KOSDAQ market sank 2.97 percent, or 22.37 points, to finish at 729.64, led by losses in smaller pharmaceutical and biochemicals shares.
The local currency ended at a near four-month low of 1,130.2 won versus the greenback, down 3.7 won from Monday’s close, as investors kept selling riskier assets amid uncertainty over Greece’s position in the eurozone.
Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasurys fell 0.4 basis point to 1.825 percent and the return on the benchmark five-year government bonds rose 0.7 basis point to 2.101 percent. (Yonhap)
