(LEAD) Seoul shares plummet nearly 5 pct on tech weakness

Lead

Seoul shares plummeted nearly 5 percent on Tuesday, as technology stocks extended losses following Samsung Electronics Co.'s release of its preliminary second-quarter earnings estimate. The Korean won also fell against the U.S. dollar, according to Yonhap News.

The benchmark Korea Composite Stock Price Index (KOSPI) opened 1.6 percent lower and extended losses, closing down 395.02 points, or 4.91 percent, at 7,656.31. Trade volume was heavy at 512.29 million shares worth 39.66 trillion won (US$25.9 billion), with decliners outnumbering gainers 509 to 358.

Coverage comparison

Yonhap News reported that the market decline was driven by profit-taking in technology stocks after Samsung Electronics estimated its operating profit for the April-June period at 89.4 trillion won, a figure that beat market forecasts. Analysts quoted by Yonhap noted that investors are now focusing on whether rising capital spending, intensifying competition, and expanding production capacity will generate the earnings growth needed to justify elevated valuations of technology companies.

Institutional and foreign investors were net sellers, offloading 309.1 billion won and 2.92 trillion won worth of stocks, respectively. Individual investors bought a net 3.13 trillion won, according to the same report.

Key Claims

• The KOSPI fell 395.02 points, or 4.91 percent, to close at 7,656.31.
• Trade volume was 512.29 million shares worth 39.66 trillion won.
• Institutions sold a net 309.1 billion won; foreigners sold a net 2.92 trillion won; individuals purchased a net 3.13 trillion won.
• Samsung Electronics estimated its operating profit for Q2 at 89.4 trillion won, beating market forecasts.
• Technology shares led the decline: Samsung Electronics plunged 6.92 percent to 296,000 won; SK hynix declined 6.06 percent to 2,201,000 won ahead of its planned US$29 billion U.S. listing.
• Hyundai Motor dropped 4.48 percent to 479,000 won; Hanwha Aerospace shed 3.19 percent to 1,122,000 won.
• Hanwha Ocean plunged 22.65 percent to 89,800 won after a South Korean consortium that includes the shipbuilder failed to win Canada's multibillion-dollar submarine procurement project.
• Among gainers, Amorepacific rose 4.2 percent to 126,500 won, and SK Innovation climbed 7.56 percent to 103,800 won.
• Bond prices closed lower; the yield on three-year Treasurys rose 0.4 basis point to 3.780 percent, and the return on benchmark five-year government bonds climbed 0.8 basis point to 3.999 percent.