Seoul shares down as techs slide on earnings uncertainty

SEOUL: Seoul shares fell 0.9 percent by mid-session on Monday, July 18 as chipmakers led by Samsung Electronics and Hynix Semiconductor Inc retreated on renewed fears that a weak recovery in component demand may hit third-quarter results.

Uncertainty over U.S. and European debt issues continued to weigh on the market, analysts said.

"The results of stress tests of European banks on Friday were widely expected to lift some of the uncertainties and drive the market higher, but some investors doubt the test was not rigorous enough," said Kim Seung-han, an analyst at HI Investment & Securities.

"Mounting concerns that the U.S. sovereign debt rating may be lowered due to its debt troubles are also hitting key IT firms hard as they are more vulnerable to the U.S. economic cycle."

By 0150 GMT, the Korea Composite Stock Price Index (KOSPI) fell 0.72 percent to 2,129.61 points.

Shares in the world's top memory chipmaker Samsung Electronics dropped 2.4 percent and its rival Hynix fell 3.8 percent, also pummeled by depressed chip prices.

Contract prices of DRAM (dynamic random access memory) chips dropped 8 percent in the first half of this month and manufacturers may have to reduce output for the first time since the global financial crisis in 2009, according to price tracker DRAMeXchange.

Despite the index's decline, the number of advancers outnumbered decliners by some 30 issues, as retail investors chased small to medium sized stocks such as retail, medical, and leisure counters.

Shares in Samsung Life Insurance Co , the country's biggest life insurer, jumped 3.4 percent after the firm said it would buy back 3 million shares worth $269 million to boost its sagging share price.

It is the firm's first share purchase since it went public in May last year and its shares have dropped nearly 20 percent since.

"This may imply that Samsung Life's top management is starting to consider efficient capital management and ways to increase shareholder value," JP Morgan analysts said in a note.

Shares in Daekyung Machinery & Engineering jumped 13.8 percent, helped by market talk that Daewoo Shipbuilding & Marine Engineering is interested in taking over the machinery company, currently worth around $190 million.

E-Mart Co , the country's biggest discount store chain, jumped 5 percent after Daewoo Securities raised its target price, citing strong growth expected from new businesses of online shopping mall Emart Mall and warehouse-type discount store Emart Traders. - Reuters