Seoul shares down amid N.Korea tension;shipyards up

By Jungyoun Park

SEOUL (BestGrowthStock) – Seoul shares slipped to hit a fresh three-month low on Monday amid heightened tensions with North Korea, but firm gains in shipbuilders such as Hyundai Heavy (009540.KS: ) helped the market.

Analysts said market reaction to a speech delivered by South Korean President Lee Myung-bak earlier on Monday on the North’s sinking of a South Korean naval vessel had a limited impact on stocks.

“The current tensions are certainly not positive, but given historical trends, losses suffered on this account will be brief, unless a drastic situation such as war arises, which I think is unlikely,” said Kwak Joong-bo, a market analyst at Hana Daetoo Securities.

President Lee said on Monday North Korea would pay the price for sinking a South Korean naval ship and that the South would invoke its right to defend itself if Pyongyang waged aggression again.

The Korea Composite Stock Price Index (.KS11: ) (KOSPI) was down 0.03 percent at 1,599.48 points as of 0204 GMT, after sinking to as low as 1,585.62 points, the lowest level since late February.

“We expect the market’s focus to shift back to macroeconomic fundamentals, particularly U.S. data due out this week,” said Lee Kyoung-su, a market analyst at Taurus Investment & Securities.

U.S. jobless claims data and housing-related data are due out later this week.

Defense issues outperformed, with Victek (065450.KQ: ), a maker of military equipment, rising 4.3 percent.

But shares in companies with interests in North Korea underperformed. Romanson (026040.KQ: ), a watchmaker that has a production unit in the North’s Kaesong industrial park, lost 1.17 percent.

Shipbuilders rose following prolonged losses, helped further by gains in the Baltic Dry Index (.BADI: ), which tracks the cost of shipping key commodities.

Samsung Heavy Industries (010140.KS: ) advanced 3.29 percent. Hyundai Heavy Industries rose 3.49 percent, following news on Sunday it had won a $600 million deal to supply electric transformers from Southern California Edison (SEC).

Samsung Electronics (005930.KS: ) shares were tracked ahead of a scheduled meeting on Monday between the top brass of Samsung Elec and Sony Corp (6758.T: ).

“Discussions will probably be on the extent of an alliance in the 3D TV and LCD panel businesses,” said John Park, an analyst at Daishin Securities.

“In 3D TV, Samsung has strength in the hardware, whereas Sony has content,” Park added.

Shares in Samsung Electronics moved broadly in line with the benchmark index, edging 0.4 percent lower.

Investment Research

(Editing by Jonathan Hopfner)

Seoul shares down amid N.Korea tension;shipyards up